FabChem China returns to black despite poorer business climate

SINGAPORE - Explosives maker Fabchem China has returned to the black, with a net profit of 13.1 million yuan (S$2.8 million), reversing from a loss of 57.5 million yuan last year.

Revenue for the year to March 31 fell by 11 per cent to 349.8 million yuan, mainly due to the lower sales posted by industrial detonators and ammonium nitrate.

The market-driven selling prices of explosive-grade ammonium nitrate continued to experience downward pressure, which severely affected the financial performance of our ammonium nitrate business activities, said FabChem.

To mitigate the impact of declining prices and rising raw materials cost, the group limited the production and sales of its ammonium nitrate.

Mining related activities, which accounted for a significant portion of the group's overall revenue, saw reduced activities owing to falling global commodity prices.

This had created a challenging and volatile operating environment for FabChem.

Gross profit margin improved by some 6.9 percentage points to 30.9 per cent as the group was no longer affected by a temporary cease production directive in May and June 2013, which impacted overall gross profit margin.

Earnings per share amounted to 5.59 fen compared to loss of 24.59 fen previously, while net asset value per share firmed by 4.46 fen to 1.73 yuan.

A final dividend of 0.3 cent a share was proposed, up from 0.2 cent last year.

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