SINGAPORE (Nov 8): Union Steel announced that 1Q18 earnings increased more than sixfold to $238,000 from $39,000 in 1Q17.

Revenue dropped 15% to $19.6 million from $23.0 million a year ago, due mainly to lower contribution from the group’s trading business in Singapore, and offset by the maiden revenue contribution of $2.0 million from its industrial crane business.  

Consequently, cost of sales dropped 19% to $16.0 million from $19.6 million last year.

This brought gross profit for the first quarter ended September to $3.68 million, 7% higher than $3.45 million the previous year, while gross profit margin improved to 18.8% in 1Q18 from 15.0% in 1Q17 due mainly to the mechanical engineering and scaffolding services

Other operating income decreased 25% to S$1.2 million in 1Q018 from S$1.6 million in 1Q17, due mainly to the lower rental income generated, foreign exchange gain and reversal of allowance for doubtful debts.

Distribution and marketing expenses dropped 67% to $0.1 million from $0.3 million a year ago, mainly attributed to the reduction of import and export activities.

Administrative expenses decreased 12% to $2.80 million from $3.18 million last year, mainly attributed to the reclassification of office rental to other operating expenses.

Other operating expenses increased 21% to $1.42 million from $1.17 million a year ago, mainly attributed to the reclassification of office rental from administrative expenses and allowance for doubtful debts, and offset by the decrease in amortisation of intangible assets which was fully amortised in 4Q17.

Finance costs had decreased 19% to $0.27 million from $0.34 million a year ago as a result of lower interest payments.

On the outlook, the demand for Asian Steel is stable as demand growth in South Asia and Southeast Asia is healthy, but due to intense industry competition and an uncertain geopolitical environment, the trading of steel will continue to be volatile.

Hence, the group will continue to mitigate these business risks and navigate cautiously, while making inroads into the regional markets to expand its geographical footprint.

Shares in Union Steel closed 80 cents on Wednesday.