ZK International Group Co., Ltd. Announces Record Revenues of $111.60 Million for the Fiscal Year 2023

Core Viewpoint - ZK International Group Co., Ltd. reported a significant net loss for the fiscal year 2023, primarily due to one-time write-offs related to non-core investments, while revenue increased modestly, indicating challenges in the market but potential for recovery in the future [10][11]. Financial Performance - Revenue for the fiscal year ended September 30, 2023, was $111.60 million, an increase of 8.99% from $102.39 million in 2022 [2][3]. - Gross profit decreased by 82.93% to $1.30 million from $7.60 million in the previous year, with a gross margin of 1.16% compared to 7.42% [2][6]. - Loss from operations was $60.44 million, a significant increase from a loss of $3.96 million in the prior year, largely due to one-off asset impairment costs [2][7]. - Net loss attributable to ZK International was $61.06 million, or $1.94 per share, compared to a net loss of $6.08 million, or $0.21 per share, in the previous year [2][10]. Market Dynamics - The increase in revenue was driven by a strategic reduction in average selling prices to boost sales volume amid a declining real estate market in China, particularly influenced by the collapse of Evergrande [3][4]. - The average selling price of steel pipe decreased by 20.25% from RMB 140.26 per piece in 2022 to RMB 111.86 in 2023, while the sales volume of steel strip increased by 87.73% [4][5]. Asset Impairment and Strategic Focus - The company recorded an asset impairment cost of $53.20 million, primarily related to the write-off of long-term investments in CG Malta and various software platforms [7][9]. - The decision to cease funding CG Malta was made due to increasing competition in the gaming market, leading to a resolution to wind up the entity [8][9]. Future Outlook - The company anticipates a recovery in the real estate market and an increase in market demand for the fiscal year 2024, leading to an increase in average selling prices [3][6]. - The strategic write-offs are part of a broader plan to streamline operations and focus on high-growth opportunities, aiming for a more robust financial foundation [10].