Boston, MA 05/14/2014 (wallstreetpr) – FSutor Technology Group Ltd. (NASDAQ:SUTR) is paying the price for reducing sales of its low margin products such as Acid-pickled steel, a move that saw its third quarter revenue negatively impacted. The company stock is already plummeting by a high of 28.18% as a result of the dismal financial results for the quarter. Revenues were greatly affected by an unexpected sharp decline in prices for steel products as the industry continue to undergo a transition to improve performance.
China Economic Slow Down Affecting Steel Sales
Dismal performance for the quarter was worsened by the fact that Sutor Technology Group Ltd. (NASDAQ:SUTR) heavily relies on small, medium sized manufacturers and steel trading companies as sale outlets. These companies were mostly affected as the china Liquidity levels reached multiyear low, generally affecting purchasing capabilities. As a result, many of the customers reduced their procurements levels.
The company believes that the economic slowdown which is expected to continue for some time should have a significant effect in terms of earnings. Sutor Technology is now pursuing a number of initiatives that are expected to transform it, into a product and service provider. Going forward, Sutor Technology plans to do away with the pursuance of sales volume and Scale, to focus more on providing fee based processing services and quality centered product offerings.
Sales of low gross margin products are to be considerably reduced as the company plans to pay more attention to high margin products with the potential of commanding impressive returns. Procurement efficiency will also be bolstered while also reducing purchasing costs through competitive bidding.
Q3 Financial
The three months ending March 31, 2014 saw Sutor Technology’s total revenue plummet to $96.4 million compared to $139.5 million reported last year. Decrease in revenue was as a result of a drop in revenue of approximately $34.6 million from AP Steel products. AP steel products were not sold externally but were used internally for processing purposes.
Sutor Technology Group Ltd. (NASDAQ:SUTR)’s Gross profit as a result of reduced sales in the quarter dropped to $3.6 million more than half, a high of $7.3 million reported last year. Total operating expenses, on the other hand, dropped by $0.2 million to $3.7 million.
