CosmoSteel issues profit warning as shares decline to 52-week low
http://www.theedgemarkets.com/sg/ar...s-profit-warning-shares-decline-52-week-low-0
SINGAPORE (July 14): CosmoSteel Holdings, whose CEO Ong Chin Sum sold his entire shareholding to a Japanese commodity trading firm last December, has issued a profit warning for its recent 3QFY2015 ended on June 30.
It said that based on the preliminary figures, a loss is expected for the quarter, mainly due to lower revenues and a lower profit margin. The company attributed it to sluggish market conditions in its key offshore and marine sector which have been hit by lower energy prices and capex reductions.
“The challenging market conditions and competition within the industry, whether locally or globally, are expected to continue for the rest of the financial year, and accordingly the group is not optimistic of being able to generate sufficient revenue to return to profitability for the rest of FY2015,” says CosmoSteel in a statement to SGX on July 13. It expects to report 3QFY2015 financial results on or before August 14.
CosmoSteel’s CEO, Ong, sold his controlling stake of 56.2 million shares or 21.3% of the company’s issued share capital at that time, at a price of 58 cents per share, to Japan’s Hanwa Co. Ltd, to forge a strategic alliance. The two companies are collaborating in the supply of piping system components and other steel-related products, where they have complementary strengths.
On the same day the profit warning was issued, CosmoSteel also gave an update on the use of proceeds from the sale of 26.4 million new shares in the company to Hanwa. It reported that of the $14.2 million net proceeds, about $8.3 million had been used for business purposes, while a balance of $5.9 million was still unutilised as of July 13.
CosmoSteel’s shares declined 0.1 cent to 19.7 cents by afternoon trading to a 52-week low previously reached on July 8.