SHANGHAI, Nov. 19, 2012 /PRNewswire/ -- China Precision Steel, Inc. (NASDAQ: CPSL) ("China Precision Steel" or the "Company"), a niche precision steel processing Company principally engaged in producing and selling high precision, cold-rolled steel products, announced today its fiscal year 2013 first quarter results for the period ended September 30, 2012.
"Since the beginning of calendar year 2012, Chinese steel companies have experienced an extremely challenging environment of overcapacity, sluggish demand and rising production costs resulting in a deterioration of profits. In response to these industry pressures and in an effort to minimize our gross loss, we decided to only accept orders on products that meet specific price targets. As a result of this strategy, during the first quarter of fiscal year 2013, we significantly cut down the sales of our loss-making low-carbon, cold-rolled steel, which resulted in a sharp drop off in revenue," commented Mr. Hai Sheng Chen, CEO of China Precision Steel. "While we remain selective in accepting new domestic orders, we have experienced an increase in exports sales as activity in the international markets has been showing some signs of strengthening."
Revenue for the first quarter of fiscal year 2013 was $6.0 million, down from revenue of $42.2 million in the first quarter of fiscal year 2012. The decrease in revenue was mainly attributable to the decrease in production and sales of low-carbon cold-rolled products in response to the company's strategy to reduce the loss-making products. Total sales volume in the first quarter of fiscal year 2013 was 7,753 tons, down from total sales volume of 45,548 tons in the prior period. High carbon and low carbon sales accounted for 42.9% and 53.4% of total sales, respectively, compared to 16.1% and 79.5%, respectively, period-on-period. Exports represented 19% of total sales for the current period, up from 1% in the same period a year ago as the international market improved during the past few months.
Gross loss in the first quarter was $1.5 million, compared to gross profit of $0.06 million in the same period a year ago. Gross loss margin for the current period was 24.6%, compared to a gross margin of 0.1% in the first quarter of fiscal 2012. The increase in gross loss margin is due to a 17.1% period-on-period decrease in average selling prices and a 3.6% period-on-period increase in average cost per unit sold, as steel prices remained weak while production costs increased. Average selling price for the quarter was $768 per ton, down from $926 per ton in the first quarter of fiscal 2012, and the average cost per unit sold was $957 per ton, up from $924 per ton in the same period a year ago.
Selling expenses for the first quarter of fiscal year 2013 were $29,273, compared to $68,304 in the first quarter of fiscal year 2012. The decline in selling expenses was primarily attributable to lower transportation costs and traveling expenses period-on-period. Administrative expenses were $442,615, or 7.4% of revenue, compared to $294,076, or 0.7% of revenue period-on-period. The increase in administrative expenses was primarily due to an increase in legal and professional fees period-on-period.
Operating loss for the current quarter was $3.4 million, compared to an operating loss of $0.4 million in the first quarter of fiscal year 2012.
SOURCE China Precision Steel Inc.