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SINGAPORE: Mainboard-listed Delong Holdings said on Thursday its first quarter net profit fell 73 percent compared to the same period in 2007. Net profit fell to S$9.2 million, as the company faced tighter worldwide supply of raw materials.
However, the manufacturer of hot-rolled steel coils saw its revenue more than double to S$559 million.
The firm reported a net profit margin of 1.6 percent for the first quarter. But this would have been higher if not for the increase in raw material costs and translation losses of S$3.4 million due to the weak US dollar.
Delong chairman Ding Liquo said operating conditions continue to be challenging because of rising raw material prices. But China's sustained economic growth has created a positive operating environment for domestic steel manufacturers.
Delong said it expects to secure additional sales contracts for its rollers for delivery from the second quarter of this year.
Back in February, Delong's controlling shareholder Best Decade Holdings signed a share purchase agreement with Russia's second-largest steelmaker, Evraz. Under the deal, Evraz will buy 51% of the existing issued share capital of Delong over a period of time.
Evraz has committed to supply Delong with at least one million tonnes of iron ore in FY2008 and at least two million tonnes per year starting from FY2009.
Delong also said it is actively exploring opportunities to secure long-term iron ore purchase agreements. - CNA/ir
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