October 16, 2008

China Precision Steel posts lower earnings for 2006-07

HK based China Precision Steel, a producer and seller of high precision cold rolled steel products, has announced that its earnings for fiscal 2007 are below last year due to a provision despite higher revenues.

It said that net income for the year ended June 30th 2007 declined by 1.3% YoY to USD 8.3 million from USD 8.4 million in fiscal 2006. Operating income for the twelve month period also declined slightly to USD 9.1 million from USD 9.3 million in 200 as operating expenses surged by 788% YoY to USD 5.9 million from USD 667,989 in fiscal 2006.

China Precision Steel said that it made a provision of USD 3.8 million in fiscal 2007 toward doubtful accounts recorded as a partial reserve against advances to suppliers where the goods ordered were not received within ninety days. China Precision said it did not record a provision for bad debts in fiscal 2006.

China Precision Steel said that gross profit for fiscal 2007 was USD 15 million up 50.5% from USD 10 million in the previous year. Gross margin, impacted by higher raw materials costs and amortization costs declined to 27.9% in 2007 from 28.6% in 2006.

Revenue for fiscal 2007, driven by increased volume of precision steel products, surged 54.7% to USD 54.0 million from USD 34.9 million last year. High carbon and low carbon products accounted for 54% and 42%, respectively, compared to 62% and 38%, respectively, in the prior year period. Export sales totaled USD 4.7 million accounting for 8.6% of total sales.