PETALING JAYA: Malaysia Steel Works (KL) Bhd (Masteel) is optimistic about achieving a third straight year of record revenue in 2012 due to anticipated higher sales of long steel products in the regional and domestic markets
The integrated long steel manufacturer achieved record revenue of RM1.25bil last year after posting RM1bil in 2010.
Masteel manufactures and markets high tensile and mild steel bars as well as prime steel billets for infrastructure development.
Masteel managing director and chief executive officer Datuk Seri Tai Hean Leng told StarBiz that the demand for long steel products would be driven by the property sector and major infrastructure projects such as the Klang Valley My Rapid Transit (MRT), new low-cost carrier terminal KLIA2, 1Malaysia People's Housing and the Tun Razak Exchange.
“We are in the process of tendering to supply to UEM Group Bhd which is a contractor for the Sungai Buloh-Kajang MRT line.
“We are poised to enjoy the benefits of all these initiatives by the Government.”
Tai also cited a recent StarBiz report that quoted Construction Industry Development Board chief executive Datuk Seri Judin Abdul Karim as saying that he expected the construction industry to experience a year-on-year growth of at least 20% this year compared with an expansion of 19% in the first half.
Tai also noted that on the regional front, the demand for long steel products in Asean was still strong as there were many infrastructure investments.
“Also, China is trying to pump prime its economy while the United States economy is expected to be cushioned by the third round of quantitative easing or QE3,” he said.
The group exports 20% to 30% of its products to Australia, Indonesia, Sri Lanka, Singapore, New Zealand, Fiji, Vietnam, the Philippines, Thailand, Bangladesh and Myanmar.
Tai said the group was increasing its production capacity to meet the anticipated demand.
The group's meltshop in Bukit Rajah, Klang would have a 10% increase in annual capacity by end-2012 to 600,000 tonnes from 550,000 tonnes presently.
Tai said this would be further increased to 650,000 tonnes by end-2013.
A new rolling mill in Klang, with an annual production capacity of 200,000 tonnes is expected to be operational by early 2014.
This would bring the group's total annual production capacity of steel bars to 550,000 tonnes.
Last year, the group had announced a three-year capital expenditure plan amounting to RM230mil to grow and upgrade its production capacity.
“This is why we want to put up our new steel mill quickly.
“We believe that in the next four to five years, construction activities in the Klang Valley will be very intensive.”
For its second quarter ended June 30, Masteel had posted a 22.7% year-on-year jump in net profit to RM19mil, while revenue increased 1.8% to RM344.1mil, mainly due to higher steel product prices and increased activity in the construction industry.
For the first half of this year, the group posted a 34.9% year-on-year drop in net profit to RM14.1mil although revenue increased 11% to RM684mil as the group had suffered red ink of RM4.88mil in the first quarter mainly due to lower selling prices.