Southern Steel Bhd sees a 10% improvement in performance this year with the construction industry expected to make a rebound after the Chinese New Year, according to chairman Datuk Abdullah Mohd Yusof.
Our business experienced a drop in demand from the local construction industry towards the end of last year following the governments decision to send home all illegal foreign workers in August. We had earlier projected growth for the year 2002 after a not so impressive performance during the economic slowdown. Business was picking up during the 2nd quarter of 2002 but slowed down after the government directive. We will catch up whatever we have lost and we have projected that demand would be robust in 2003, he said.
Abdullah said this after the company EGM at its Prai plant on Tuesday.
The EGM approved a resolution related to recurrent related party transactions (RRPT) with NatSteel Ltd (NSL) group.
The RRPT is necessary because a recent power failure at Southern Steel resulted in the company sourcing alternative supply from NSL to meet committed deliveries.
Since one of the smelting plants will not be operating for a few months, purchases of billets and other related steel supply are important to ensure a smooth transitional period to enable Southern Steel to fulfil its commitment to its customers.
Abdullah also expressed confidence that results for the year ended Dec 31, 2002 would show the company continuing on the growth path. According to Southern Steels 2001 annual report, the company recorded a turnover of RM1.37bil in 2001, and RM1.25bil in 2000.
Abdullah said that as at Sept 30, 2002, the company recorded profit before tax of RM25.7mil, compared with a loss before taxation of RM47mil in the corresponding period in 2001.
We are now producing about 100 steel-related products, 30% of which are exported to 20 countries. This year will be better because of the anticipated improvement in the construction industry and 70% of our products are for the local market, he added.