SINGAPORE (Feb 26): AP Oil International announced 31% lower FY17 earnings of $2.4 million compared to $3.5 million in FY16 on lower margins and foreign exchange (forex) losses incurred.  

Revenue for the full year grew 16% to $92 million from $79.1 million a year ago due to increased trading in manufacturing volume.

In line with the higher revenue and also due to an increase in raw material prices, cost of sales grew by 22% to $80.8 million from $66.1 million in FY16.

In spite of the revenue growth, gross profit margin fell by 4 percentage points to 12.1% on the back of lower margins from competition in marine lubricants sales.

An forex loss amounting to $3.2 million compared to a gain of $0.9 million a year ago was also registered over FY17, arising mainly from the translation of financial statements of entities in the group with USD functional currency to SGD at the exchange rate as at end-FY17.   

As at end 2017, trade and other receivables stood at $10.8 million, up 15% from $9.4 million in FY16 due to the higher manufacturing and trading revenue.

Cash and cash equivalents fell 16% to $32 million from $38.3 million previously as a result of capital contribution to subscribe for equity interest in Chongqing Zongshen Financial Leasing Company; the final 2016 dividend paid in 1H17; and purchase of property, plant and equipment.

Looking back on FY17, AP Oil attributes the erosion of its gross profit to major marine lubricant competition, with the implementation of broad-based low prices which was further exacerbated by an internationally-weak shipping industry.

While it expects these conditions to continue into FY18, AP Oil says it is making a conscientious effort in new business development to bolster the group’s performance in the challenging year ahead.

Shares in AP Oil closed flat at 24 cents on Monday.