Masteel MD and CEO Datuk Seri Tai Hean Leng sees conditions improving going forward as the ringgit continues to rebound, reflecting the country
KUALA LUMPUR: Malaysia Steel Works (KL) Bhd
posted net losses of RM24.14mil in the third quarter ended Sept 30, 2015 as it was severely impacted by foreign exchange losses and competition.
Masteel said on Wednesday the net losses a year ago was RM6.10mil. Revenue slumped 16.7% to RM301.44mil from RM362.10mil. Loss per share was 10.04 sen compared with 2.73 sen a year ago.
Its managing director and CEO Datuk Seri Tai Hean Leng said while 3Q15 was a challenging time due to the unfavourable foreign exchange and competition, “we however see the conditions improving going forward as the ringgit continues to rebound, reflecting our country’s strong and stable economic fundamentals”.
He said there was a recovery in its revenue in the just-ended third quarter on strengthened demand for steel bars.
Tai said he was optimistic that with its new rolling mill startting operations, Masteel would be able to achieve better economies of scale, “thus enabling us to produce competitively which would contribute positively to our bottom-line in the coming months”.
Tai said he expected Masteel to see a turnaround in 2016, as the group’s newly-commissioned rolling mill in Bukit Raja would contribute additional revenue of up to RM200mil per annum.
Its Bukit Raja rolling mill started operations in October 2015,and targets to produce additional 150,000 tonnes of steel bars in 2016.
Together with existing production capacity of 450,000 tonnes from its Petaling Jaya mill, Masteel’s total steel bar capacity in 2016 is expected to reach 600,000 tonnes.
In the nine months ended Sept 30, Masteel slipped into the red with net loss of RM49mill on revenue of RM869mi. This was in contrast with the net profit of s RM11.28mil on revenue of RM1.06bil in the previous corresponding period.
Despite his optimistic outlook, he was also cautious about an increasing supply of scrap metal from regional countries such as China, Japan, and South Korea in the coming years.
“With the supply of scrap metal expected to exceed demand, prices would likely come under pressure, thus translating into lower cost of production for our operations in the long run.”
The group’s steel milling operations are based on the electric arc furnace, which utilises scrap metal as its primary raw material.
Masteel is collaborating closely with the regulatory bodies to ensure enforcement of the recently-announced 5% import duty for steel bars through swift identification and reporting of errant importers.
It expected this move to curb the rampant imports of substandard steel bars from China.
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