Page 57 - Annual Report English 2018

Tycoons Worldwide Group (Thailand) Plc.

(2) Expenses

Cost of sales
Cost of sales is primarily composed of conversion cost and raw materials, of which
billet is the main component. In year 2018, costs of sales were 9,980MB, increased by
43.23% compared to year 2017. This was mainly because the sales volume increased.

Selling and administrative expenses (SG&A)
In year 2018, selling and administrative expenses were 361MB, an 8.43% increase
from year 2017, The ratio of SG&A/Sales was 3.49% in 2018 and 4.42% in 2017.
The major components of SG&A are depreciation, salary and wages as well as
transportation costs, which vary directly with sales volume. The increase in SG&A
in 2018 is mainly caused by the sales volume increased. Transportation expense of
Inland freight increased and in February 2018, due to the equipment renovation of the
rolling mill production line, the cost during the shutdown period was transferred to the
management fee.

(3) Profit

Gross profit

In 2018, gross margin was 376MB. The rate decreased from 7.30% of 2017 to 3.63%
of 2018, mainly due to the steep decline in international prices of finished steel and
billets since November 2018. As a result of the decrease in selling price in quarter
fourth, the company reports a decrease in gross profit. In 2017, gross margin was
549MB. The rate decreased from 8.37% of 2016 to 7.3% of 2017, mainly due to the
decrease of “Reversal of decreased of inventory to net realizable value” of 28MB
compared with 2016.

Operating profit

Operating profit in 2018 was 15.53MB, the rate decreased from 2.88% of 2017 to
0.15% of 2018, resulted from the decrease in gross profit rate. Operating profit in 2017
was 216 MB, the rate decreased from 3.33% of 2016 to 2.88% of 2017, resulted from
the decrease in gross profit rate.

Net income

Net loss in 2018 was 36MB, net income rate decreased from 2.15% of 2017 to
0.34% of 2018. The net loss 36MB of 2018 mainly resulted from steep decline in
international prices of finished steel and billets since November 2018. As a result of
the decrease in selling price in quarter fourth, the company reports a decrease in gross
profit.
Net income in 2017 was 188MB, net income rate increased from 1.13% of 2016 to
2.51% of 2017. The net income 188MB of 2017 mainly resulted from operating profit
and other incomes such as gains on disposal and write-off of plant and equipment.

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