Recon Technology, Ltd. (Nasdaq: RCON) stock was taking the aerial route in the after-market session as it surged 95.8% to $2.82, after a China-based independent solutions integrator in the oilfield service and environmental protection, electric power, and coal chemical industries, today announced its financial results for the fiscal year 2020.
Compared to the fiscal year 2019, gross sales were roughly RMB65.8 million ($9.3 million), reflecting a decline of 35.8 percent.
Automation devices and services sales declined to roughly RMB51.4 million ($7.3 million), which reflects a 19.1 percent decline from the fiscal year 2019. The decline was largely due to the delayed approval by Shenhua Group of many projects and fewer expenses, and reduced orders from Xinjiang East Hope New Energy Co., Ltd.
Revenue from equipment and accessories declined to approximately RMB14.2 million ($2.0 million), reflecting a 40.6 percent decline from the fiscal year 2019, primarily due to reduced demand for the company’s goods from oilfield firms as a result of low oil prices.
Sales from the environmental security of the oilfield declined by 99.2 percent to almost nil for this time, mostly caused by the late approval audit of the Gansu development project, so orders were not met, and revenue was not accepted during the 2020 fiscal year.
Total revenue costs declined by 36.4 percent to roughly RMB46.2 million ($6.5 million), primarily as a result of lower revenue-related costs.
Gross profit declined to roughly RMB19.6 million ($2.8 million), reflecting a decline of 34.4 percent from the fiscal year 2019. The gross margin, relative to 29.2 percent last year, was held at the same pace of 29.8 percent. In fact, the gross margin for the automation and machinery divisions in the fiscal year 2020 has all increased. The Organization estimates that when the treatment process is finished and income is recognized, the gross margin for the oilfield environmental management division will return to a level of 40 percent.
Total operating costs fell to around RMB39.8 million ($5.6 million), reflecting a 26.5 percent fall.
Sales and service costs were around RMB4.4 million ($0.6 million), reflecting a decline of 51.3 percent from the fiscal year 2019. As the Firm continued to manage its operational costs, as well as the ban on travel and outdoor sports levied by the PRC government due to the COVID-19 during the fiscal year 2020, this decline was largely due to lower travel and entertainment expenses.