Red ink at Fabchem China as turnover plunges

Fabchem China workers assembling explosives, a mainstay product of the company.
Fabchem China workers assembling explosives, a mainstay product of the company. PHOTO: FABCHEM CHINA

Explosives maker reports $7m loss for year, due mainly to disruption of production activity

Earnings at explosives maker Fabchem China plunged into the red on the back of a sharp fall in turnover in the last financial year.

A net profit of 13.1 million yuan in the previous year turned into a net loss of 33.8 million yuan (S$7 million) for the 12 months to March 31.

Revenue fared better, slipping 42.7 per cent to 200.4 million yuan.

Fabchem said the loss was mainly due to lower turnover as its production activities were temporarily halted twice.

Sales were first hit by the temporary closure of ports last September due to a series of explosions at warehouses in Tianjin in August that killed more than 160 people and injured hundreds others. Although Fabchem's unit did not export through Tianjin, other ports it used were closed, affecting the docking of customers' vessels, including those taking goods to Australia.


    NET PROFIT: -33.8 million yuan (not meaningful)

    REVENUE: 200.4 million yuan (-42.7%)

    LOSS PER SHARE: 72.27 fen (not meaningful)

Sales were again hit in the third quarter when production was temporarily suspended by the authorities, due to an explosion in Shandong province last October.

Overall gross profit margin dropped by 5.2 percentage points to 25.7 per cent in the last financial year; sales of ammonium nitrate, which accounted for the lowest gross margin product segment, fell.

Fabchem also cited China's slowdown having an impact on the prices of minerals and metal commodities, leading to reduced mining activities, which its sales are based on.

"In the light of the challenging business environment, we have responded with new initiatives but the added regulatory directives mitigated these efforts over the past year," said Fabchem managing director Sun Bowen.

Loss per share for the year was 72.27 fen, compared with earnings per share of 27.93 fen while net asset value per share stood at 786.44 fen as at March 31, down from 863.72 a year earlier.

Fabchem shares were untraded yesterday. They last traded at 18.8 cents on May 24.

A version of this article appeared in the print edition of The Straits Times on May 31, 2016, with the headline 'Red ink at Fabchem China as turnover plunges'. Print Edition | Subscribe