Novo Group, the global steel supply-chain management company, says the group achieved revenue of US$114.2 million ($158.6 million) for the three months ending Oct 31 (2Q2010) from US$81.2 million in 2Q2009, representing an increase of 40.6%.

Novo attributes the growth to the expansion of demand of raw materials in North Asia and the contribution of the domestic trading and distribution business in China and Hong Kong.

With the group benefiting from the recent escalation of steel price and the change of trading terms for certain major contracts, gross profit increased to US$24.2 million in 2Q2010 from US$5.0 million in 2Q2009 and gross profit margin rising from 6.2% in 2Q2009 to 21.2% in 2Q2010.
 
On the group’s expense side, distribution and selling expense increased to US$22.5 million in 2Q2010 from US$5.7 million in 2Q2009 due to the increase in sales and unit freight charge and the change of trading terms for certain major contracts, while finance cost decreased to US$0.2 million for 2Q2010 from US$0.7 million in the previous corresponding period. Other operating expenses also declined by 96.8% to US$0.1 million due mainly to an exchange loss of US$1.9 million in 2Q2009.

Net profit of the group during the period improved to US$1.5 million from a loss of US$3.6 million in the previous corresponding financial period (2Q2009).

Earnings per share for 2Q2010 recovered to 0.25 cents from negative 0.58 cents in 2Q2009.  Net Asset Value (NAV) per share also moved up to 7.1 US cents as of Oct 31 from 6.5 US cents in April 30.

Recently the group set up a subsidiary to handle non-steel trading business as a new revenue stream. At present, the group has managed to conclude coal trading contracts and is expecting to obtain fixed allocations from coal mines in near future.

Novo has also completed procurement of a piece of land for building a steel processing centre in Tianjin. The construction of factory and installation of the equipment is expected to complete within the second half of 2010.