SINGAPORE (May 11): Sapphire Corp announced earnings of RMB4.1 million ($0.9 million), up 1.9% from RMB4 million a year ago due to higher revenue.

Revenue for the quarter grew 62.4% to RMB303.6 million from RMB188.1 in 1Q17 due to a surge in ongoing projects in China for the group’s core revenue driver, Ranken Infrastructure, in addition to higher sales of railway sleepers over the quarter.

Gross profit margin however fell to 8.8% from 14.4% a year ago, mainly due to higher costs of materials and lower margins from the sale of railway sleepers. As such, gross profit fell marginally to RMB26.9 million from RMB27 million in 1Q17.

Other income halved to RMB1.3 million from RMB3 million in the absence of an exchange gain recorded in the previous year, along with lower project-related compensation income in the latest quarter compared to a year ago.

In its filing on Thursday, Sapphire Corp’s CEO, Wang Heng, says the latest set of 1Q results coincided with the Chinese New Year festive season which resulted in significantly higher labour costs.

She also attributes the decline in gross margins to more complex and technically challenging underground railway projects undertaken by the group over the quarter under review.

“Nevertheless, we are pleased with the underlying operational performance and we will continue to focus on enhancing our operational capabilities and efficiencies in this niche area,” says Wang.

Shares in Sapphire closed 2.8% higher at 19 cents on Thursday.