WENZHOU, China, Jan. 27, 2025 /PRNewswire/ -- ZK International Group Co., Ltd. (ZKIN) ("ZK International" or the "Company"), a leader in high-performance stainless steel and carbon steel pipe solutions, is pleased to announce a significant turnaround in its financial performance for the fiscal year ended September 30, 2024, achieving 405% increase in gross profit while also decreasing its net loss significantly by 95.44%.
Financial Highlights for the Fiscal Year 2024
For the Fiscal Year Ended September 30, | ||||||
($ millions, except per share data) | 2024 | 2023 | % Change | |||
Revenue | $108.20 | $111.60 | -3.05 % | |||
Gross profit | $6.55 | $1.30 | 405.02 % | |||
Gross margin | 6.5 % | 1.16 % | 4.89 percentage points | |||
Income (loss) from operations | ($1.72) | ($60.44) | 97.16 % | |||
Operating income (loss) margin | -1.59 % | -54.16 % | 52.57 percentage points | |||
Net income (loss) attributable to ZK International | ($2.78) | ($61.06) | 95.44 % | |||
Diluted earnings (loss) per share | ($0.08) | ($1.94) | 95.88 % | |||
Net book value per share | $0.82 | $0.80 | 2.50 % | |||
Revenue
Revenues decreased by $3,399,809, or 3.05%, to $108,199,877 for the year ended September 30, 2024, from $111,599,686 for the year ended September 30, 2023. The decrease in revenues was primarily driven by the following factors:
1) During the fiscal year 2024, we observed a recovery in the real estate market, which fueled increased demand. This contrasts with the market pressure faced in fiscal year 2023, particularly due to the downturn in the Chinese real estate market, exacerbated by the collapse of Evergrande. The recovery in 2024 provided us with more favorable sales opportunities. In response to rising raw material costs, the company increased its weighted average selling price (ASP) to sustain profit margins. However, the price increases led to the loss of price-sensitive customers and heightened market competition, which ultimately resulted in a decline in overall sales and adversely affected revenue.
2) During the fiscal year 2024, raw material prices continued to rise, particularly the price of nickel used in stainless steel, which increased production costs. This situation differed from the fluctuations in raw material prices observed in fiscal year 2023. During the 2023 fiscal year, nickel prices surged by 33.33% and the company responded by lowering sales prices to expand market share. This strategy laid the foundation for the company to increase ASP during 2024 fiscal year as the expanded market share offered us more space to increase our prices without significantly affecting our overall sales performance.
3) During Q1 of 2025 fiscal year, we have further increased our sales prices and improved our gross margin mainly attributable to the increased investment led by the public sector. The Company expects to have a gross profit margin in the range of 10% to 12% for the 2025 fiscal year.
Gross Profit
Our gross profit increased by $5,250,780 or 405.023% to $6,547,196 for the year ended September 30, 2024 from $1,296,416 for the year ended September 30, 2023. Gross profit margin was 6.05% for the year ended September 30, 2024, as compared to 1.16% for the year ended September 30, 2023. The increase in gross profit was primarily driven by a rise in the weighted average selling price, which was partially offset by the pressure from rising costs.
For the 2025 fiscal year, the company will continue to raise the ASP, which will significantly improve our gross margin, by taking advantage of the market recovery and expanded market share of the company's products.
Loss from Operations
Our loss from operations decreased by $58,725,353 or 97.16% to $1,718,235 for the year ended September 30, 2024 from $60,443,588 for the year ended September 30, 2023. The decrease of operational loss was mainly due to our improved gross margin performance and reduced one-off asset impairment costs that incurred during 2023 fiscal year.
During 2023 fiscal year, the Company recorded asset impairment cost of $53.20 million, primarily for the write off of its long-term investment in CG Malta and the software platforms, including xSigma Trading, MaximNFT, and the Defi Exchange.
For the 2021 and 2022 fiscal years, CG Malta achieved high growth with its online gaming services launched in more than 10 states in US with high growth rate of Real Money Handle and First-Time Depositor. However, during the 2023 fiscal year, the competition of gaming market has been increasingly intense. Market bullishness and valuations peaked in early-2023 and declined rapidly from there, preventing CG Malta from raising further capital to execute its business plan. For the best interest of the Company's shareholder, the Company decided to stop funding CG Malta and instead demanded the management team of CG Malta took active measures to achieve organic growth and healthy cash flow. However, the business was unable to raise the capital required to fund the business plan, and therefore the shareholders of CG Malta passed shareholder resolution on November 27, 2023 to cease operations of CG Malta and wind up the entity. For the year ended September 30, 2023, the Company has written off the investment in CG Malta.
During 2023 fiscal year, the Company evaluated the recoverability of the three platforms, including Defi Exchange, xSigma Trading, and MaximNFT and concluded that the carrying value of the three platforms may not be recoverable as it projects that the platform is likely to have continuing losses and it's more likely than not this platform will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. For the year ended September 30, 2023, the Company wrote off the carrying value of the three platforms.
Net Loss Attributable to ZK International
Net loss attributable to ZK International was $2.78 million, or net loss of $0.08 per share. This compared to net loss attributable to ZK International of $61.06 million, or $1.94 per share, for the prior fiscal year.
Net book value
Net book value per share was $0.82 as of September 30, 2023, compared to $0.80 as of September 30, 2022.
Mr. Jiancong Huang, Chairman of ZK International, commented, "The business climate is steadily improving, marking a turning point for ZK International. The improvement in our financial performance for the Fiscal Year end of FY2024 underscores our resilience and strategic focus during challenging times. With market conditions recovering, our expanded market share, enhanced operational strategies, and commitment to innovation and quality position us to capitalize on this momentum. As we strengthen our global presence and drive innovation, we anticipate significant growth in the next few years, including increased profit margins and net profit. ZK International is entering an exciting new era of expansion, and we are confident in achieving sustainable growth and creating long-term value for our shareholders.
About ZK International Group Co., Ltd.
ZK International Group Co., Ltd. is a China -based designer, engineer, manufacturer, and supplier of patented high-performance stainless steel and carbon steel pipe products that require sophisticated water or gas pipeline systems. The Company owns 33 patents, 21 trademarks, 2 Technical Achievement Awards, and 10 National and Industry Standard Awards. ZK International is Quality Management System Certified (ISO9001), Environmental Management System Certified (ISO1401), and a National Industrial Stainless Steel Production Licensee that is focused on supplying steel piping for the multi-billion dollar industries of Gas and Water sectors. ZK has supplied stainless steel pipelines for over 2,000 projects, including the Beijing National Airport, the "Water Cube", and "Bird's Nest", which were venues for the 2008 Beijing Olympics.
Emphasizing superior properties and durability of its steel piping, ZK International is providing a solution for the delivery of high quality, highly sustainable, environmentally sound drinkable water not only to the China market but also to international markets such as Europe, East Asia, and Southeast Asia.
Learn more about ZK International's innovative solutions and market leadership by visiting www.ZKInternationalGroup.com. Additionally, please follow the Company on Twitter, Facebook, YouTube, and Weibo. For further information on the Company's SEC filings please visit www.sec.gov.
Safe Harbor Statement
This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. Without limiting the generality of the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are not guarantee of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict and many of which are beyond the control of ZK International. Actual results may differ from those projected in the forward-looking statements due to risks and uncertainties, as well as other risk factors that are included in the Company's filings with the U.S. Securities and Exchange Commission. Although ZK International believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking statements will be realized. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by ZK International or any other person that their objectives or plans will be achieved. ZK International does not undertake any obligation to revise the forward-looking statements contained herein to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
SOURCE ZK International Group Co., Ltd.
