[The Edge Daily] Masteel 3Q profit falls 56% despite higher sales

KUALA LUMPUR (Nov 30): Integrated steel manufacturer Malaysia Steel Works (KL) Bhd saw its net profit for third quarter ended Sept 30, 2012 (3Q12) plunge 56.5% year-on-year (y-o-y) to RM7 million, despite a 4.2% rise in revenue to RM312.9 million.

In a press release, Masteel indicated that higher production costs and weaker selling prices had affected its profitability.

For the nine months to Sept 30, 2012, the steel maker posted a net profit of RM21.15 million, down 44% y-o-y, while revenue stood at RM996.98, down 8.8%.

The basic earnings per share for the nine months stood at 10.04 sen.

The steel maker’s group managing director and chief executive officer Datuk Seri Tai Hean Leng said in the statement: “We are pleased with what Masteel was able to achieve despite the challenging headwinds in the market.”

Looking ahead, Tai said with more Economic Transformation Programme projects in the pipeline and the seasonal upswing trend expected from Malaysia’s export markets, he is “optimistic that we will end the year on a positive note”.

Noting that over 80% of Masteel’s products are sold locally, he said: “While this increase in local demand is welcomed, we know we cannot depend entirely on the domestic market, especially when our increased capacity comes on-stream.

“Hence, going forward, we will continue to actively grow our export orders — both in the markets that we already export to as well as into new markets that we have yet to penetrate.”

Masteel currently operates a 350,000 metric tonne (MT) per annum rolling mill in Petaling Jaya, Selangor, which produces high-tensile steel bars. It also operates a melt shop, which can produce 550,000 MT of steel billets annually. Billets are the raw materials used in the production of steel products like bars.

The group is building a second rolling mill in Bukit Raja that, once completed in end-2013 or early-2014, will boost Masteel’s ability to produce high-tensile steel bars by another 180,000 MT per annum, according to the statement.

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