NEW YORK China Armco Metals Inc.s revenue took a hit in the first quarter as metal ore trading declined dramatically, although the company managed to narrow its net loss compared with the same year-ago period.
The San Mateo, Calif.-based company posted a net loss of $1.09 million for the three months ended March 31, down 34.4 percent from a $1.67-million net loss logged in the same 2012 quarter, on revenue that fell 70.9 percent to $14.3 million from $49.3 million, the company said May 15.
The company attributed the decrease in revenue to an 87-percent decline in trading business sales to $35.9 million.
China Armco sold 32,286 tonnes of various metal ores at an average price of $166 per tonne in the quarter, down from 324,849 tonnes sold at an average price of $127 per tonne in the same period a year earlier.
Meanwhile, its metals recycling business contributed $9 million in sales during the quarter, up from $8 million in the first quarter of 2012.
While gross margins in its trading business fell to 0.3 percent, margins in its recycling businesses improved to 7 percent, it said.
While Chinas steel industry saw a turnaround in the first quarter, the sector remains weak due to competition amid industrial overcapacity, China Armco chairman and chief executive officer Kexuan Yao said.
"Our trading business was adversely affected by the market, resulting in sharp declines on net revenues and gross margins during the quarter. However, our revenue and gross margin in our recycling business continued to grow steady; the quantities of scrap metals processed and sold from our recycling facility in the first quarter continued to increase compared to the first quarter of 2012," he said.
In the second quarter, China Armco has increased its production of recycled nonferrous scrap, which is expected to help improve its recycling units profitability, Yao added.
During the quarter, the companys scrap metal recycling volumes increased to 43,795 tonnes, up 74.7 percent from 25,071 tonnes in the same period last year.