Asia Enterprises suffers a devastating 81% profit drop

Blame it on the 21% revenue plunge.

According to a release, Asia Enterprises Holding announced its financial results for the 12 months ended 31 December 2012.

The Group recorded net profit of S$1.7 million, down 81% from S$8.9 million in the previous year. This was caused by lower revenue which declined 21% to S$133.7 million from S$170.2 million in FY2011.

The Group’s gross profit was eroded further by reduced profit margins as international steel prices had slipped into a downtrend since April 2012. As such, gross profit was down 50% to S$10.4 million from S$20.9 million in the previous financial year.

In the fourth quarter of FY2012 (“4Q12”), Group revenue declined 31% year-on-year to S$25.9 million due to lower sales volume and average selling prices. The Group posted a net loss of S$2.0 million in 4Q12, owing to a 94% contraction in gross profit to S$0.3 million and a one-time write-down of S$1.2 million in its inventory.

Nevertheless, the Group remained profitable in spite of the challenging operating environment. Since its public listing in 2005, the Group has so far maintained a consistent annual final dividend payout of 40%.

Subject to shareholders’ approval, for FY2012, the Group has proposed a final dividend and special dividend of 0.2 cents and 0.8 cents respectively. The total proposed dividend of 1.0 cent per share translates into a yield of 3.9% based on Asia Enterprises’ share price of 25.5 cents at the close of market today.