Sutor Technology Group reports FY 2010 results

Sutor Technology Group announced its fiscal year 2010 results


FY'10 FY'09 Change

Revenue 478.7 429.8 11.40%

Gross profit 32.8 36.3 -9.60%

Net income 11.3 18.7 -39.60%

EPS 0.29 0.49 -40.80%



In USD million

1. Revenue

For the fiscal year ended June 30th 2010, revenue was USD 478.7 million compared to USD 429.8 million during the same period last year an increase of 11.4%. Sales volume increased by approximately 27.1% in fiscal year 2010 to approximately 746,000 tonnes as compared to the same period last year. The increase in revenue was primarily due to increased sales from the Company new 400,000 MT HDG steel production lines of approximately USD 99.8 million. Also benefiting revenue was the further implementation of the Chinese government's stimulus package and the rebound of downstream industries, which led to higher demand for fine processed steel products.

On a geographic basis, revenue generated from outside of China was USD 53.7 million or 11.2% of our total revenue for fiscal year 2010 as compared to USD 45.4 million or 10.6% of our total revenue for fiscal year 2009. This increase was mainly due to our efforts to expand product penetration into new markets and acceptance of our high value added anti-septic and anti- fingerprint products in international markets.

2. Gross Profit
Gross profit for the 2010 fiscal year was USD 32.8 million or 6.9% of revenue compared to USD 36.3 million or 8.4% of revenue during the same period last year. The decrease in gross margin was mainly attributable to higher production costs caused by a larger proportion of smaller orders we received in fiscal year 2010. Further, lower capacity utilization ratio of our new HDG production lines also adversely affected the gross margin.

3. General and Administrative Expenses
General and administrative expenses increased USD 0.9 million to USD 6.4 million or 1.3% of revenue, in fiscal year 2010 from USD 5.5 million or 1.3% of revenue in fiscal year 2009.

4. Selling Expenses

Selling expenses increased 72.3% to USD 8.1 million or 1.7% of total revenue, in fiscal year 2010 from USD 4.7 million or 1.1% of total revenue, in fiscal year 2009. The increase was mainly attributable to the rising costs of international sales.

The Company increased efforts on marketing and product promotion in the first fiscal quarter of 2010. In addition, transportation costs increased in the second half of fiscal year 2010 due to the increased percentage of international sales and freight costs.

5. Income from Operations
Income from operations in fiscal 2010 was USD 18.4 million a 29.8% decrease compared to USD 26.2 million during the same period last year.

6. Net Income

Net income was USD 11.3 million or USD 0.29 per diluted share, a decrease of 40.8%, compared to net income of USD18.7 million or USD 0.49 per diluted share, during the same period last year.

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