Oriental Group dives deeper into the red with $18.1m losses

Blame it on corroding domestic sales of steel products in China.

Market forces in China weighed on Oriental Group’s performance in FY2015. In its latest annual report, the group revealed a net loss of S$18.1 million (RMB88.8 million), way higher than its $1.3 million (RMB6.3 million) net loss in the previous financial year.

According to Oriental Group, the company derives its sales revenue largely from domestic sales and overseas sales in China.

“PRC domestic sales, which accounted for 32.8% of group’s total revenue, slumped by S$52.4 million (RMB256.4 million) to S$11.4 million (RMB55.7 million) in FY2015 or 82.1% from FY2014,” the company said.

Overseas sales unit saw improved performance, accounting 64.0% of the group’s total revenue. Overall revenue soared 125.4% to S$22.2 million (RMB108.7 million) in FY2015, S$12.4 million (RMB60.5 million) higher compared to the same period a year ago. This was due mainly to the higher sales orders received from Singapore, Malaysia and Indonesia following the group’s marketing networks extension to SEA market after the establishment of its steel trading division in Singapore.

But alongside this, administrative expenses also rose 209.6% or S$9.8 million (RMB48.1 million) from S$4.7 million (RMB23.0 million) in FY2014 to RMB71.1 million in FY2015.

“This was mainly due to S$5.4 million (RMB26.3 million) impairment loss for receivables and S$2.9 million (RMB14.0 million) impairment loss for property, plant and equipment after assessment of fair value measurement of its property, plant and equipment in use. In addition, professional fees were incurred for corporate exercises conducted in FY2015, and staff costs were incurred for additional staff strength required in setting up our Overseas Sales unit,” the group explained.