SINGAPORE (Aug 28): Scrap metal trader Union Steel Holdings has swung out of the red with earnings of $1.4 million for the full year ended June, from a loss of $16.7 million a year ago.

This was mainly attributable to higher gross profit and a decline in other operating expenses during the year.

Gross profit grew 49.9% to $13.9 million on the back of a 7-percentage-point increase in gross profit margin to 17.7% in FY2017, mainly due to its engineering and scaffolding services.

Other operating expenses fell 70% to $6.0 million in FY2017, mainly due to the absence of expenses incurred for cessation of operations in Malaysia last year.

Revenue slipped 9% to $78.6 million in FY2017, from $86.5 million a year ago.

The decline was mainly due to lower contribution from the group’s trading business in Singapore, which was partially offset by maiden revenue contribution of $5.2 million from newly-acquired subsidiaries Transvictory and Megafab.

As at end June, cash and cash equivalents stood at $20.9 million.

Looking ahead, the group says the demand for steel is expected to be weak amid a challenging outlook for the steel industry.

Union Steel adds that its strategy to diversify and expand into complementary business areas have started to bear fruit.

“After completion of the acquisition of Transvictory and Megafab, the group has strengthened its market position and value proposition in the engineering industry as a result of the operational synergies between the newly acquired companies and the group,” it says in a filing to SGX on Monday.

Shares in Union Steel last closed at 84 cents on Aug 25.