In the red

Margins hit heavily. Despite posting a 59.7% gain in revenue YoY for 3Q08 from S$399.3m to S$637.5m due to higher sales volume from expanded
production capacities and higher ASPs, Delong’s gross profit fell a hefty 85.4%
from S$39.7m to S$5.8m during the same period. This also meant that gross
profit margins plummeted YoY from 10.0% to 0.9% for 3Q08. Consequently, it
slumped into net losses of S$11.9m for 3Q08, against profits of S$24.7m in the previous corresponding period.

Another obvious reading of a deteriorating operating environment is the
Group’s gross profit margin, which slumped from 10.0% to 0.9% in the third
quarter. This boiled down to higher input costs locked-in or procured earlier in
the year versus falling ASPs of steel products as prices started coming off from late Jul 08 onwards.