NEW YORK China Armco Metals Inc. posted net income of $134,655 in the third quarter, in contrast to a $1.1-million net loss in the same period last year, despite a 4.6-percent decline in revenue to $15.36 million from $16.1 million.
The San Mateo, Calif.-based scrap metals recycler and distributor of imported metal ore said its gross profit more than doubled to nearly $1.92 million in the three months ended Sept. 30 from $810,196 a year earlier as scrap metal sales rose about 60 percent to $13.4 million from around $8.3 million.
Improved profit margins were brought on by "a significant increase of gross margin in our scrap recycling business from 8 percent to 14 percent" as a result of a market rebound, the company said. The companys overall gross profit margin rose to 12.5 percent from 5 percent.
China Armco sold 38,752 tonnes of scrap during the third quarter, and increased scrap production to 44,793 tonnes from 13,500 tonnes a year earlier.
"We significantly expanded our metal recycling business activities (during the quarter) and our production and sales increased by 232 percent and 134 percent in quantity, respectively, compared to the same period of 2011," chairman and chief executive officer Kexuan Yao said in a statement.
However, metal ore trading plunged 74 percent to $2 million from $7.7 million in the third quarter of 2011, China Armco said, with a $3.9-million fall in iron ore sales and a $4.1-million drop in chromium ore sales.
For the first nine months of this year, China Armco posted a net loss of $3.23 million, widening from a $1.83-million loss a year earlier, on revenue that dropped 28.7 percent to $68.94 million from $96.75 million.
Scrap sales accounted for $25 million of total revenue, down from $36.8 million in the first nine months of last year, and metal ore trading contributed $43.9 million, down from $59.9 million, the company said.