Metal business China Armco has seen both gross profit and revenue decline in the first quarter of 2012.
For the first quarter of this year net revenue was slightly down compared to the same period last year at $49.3 million (£30.9 million), as opposed to the $49.7 million (£31.25 million) of the first quarter of 2011.
Gross profit for the first quarter decreased 54 per cent to $1.5 million (£0.94 million) compared to the $3.2 million (£2.01 million) of the first quarter in 2011. Gross margin for the recycling and trading businesses declined to 3 per cent and 2 per cent respectively, in comparison to the 6 per cent for both businesses in the first quarter of 2011.
Its metal recycling business contributed $8.7 million (£5.4 million) in sales during the first three months of 2012, which was an increase of 38 per cent compared to $6.3 million (£3.9 million) in sales in the same period of 2011.
China Armco chairman and chief executive Kexuan Yao said: “The first quarter was the most difficult quarter for China’s steel industry in recent years in which the whole industry suffered from a quarterly loss for the first time in ten years. Both our trading and recycling businesses were adversely affected by the brutal market, resulting in sharp gross declines on gross margins during the quarter.
“However, our revenue in the recycling business has continued to grow steadily. The quantities of metal ores and scrap metals we sold reached a record high compared to any first quarter in the past. We believe our solid and sound foundation in the industry, our strong relationship with our customers and suppliers around the world, and the strategy we have developed will enable us to overcome various challenges and fully leverage our operating model to generate incremental revenue and profitability.
“We consider the market is recovering from its bottom and we are well-positioned to capture a growing share of an increasing market demand for our products.”