KUALA LUMPUR: CSC Steel Holdings Bhd's net profit for the third quarter ended Sept 30,2019 surged by 253% to RM10.53mil from RM2.98mil a year ago, underpinned by improved margins, higher sales and lower production costs.
It reported on Friday its revenue increased by 5% to RM353.67mil from RM336.59mil. Its profit before tax rose by 240% to RM12.78mil from RM3.76mil. Earnings per share were 2.85 sen compared with 0.81 sen.
“The stronger performance mainly due to 12.4% increase in overall sales volume albeit lower average selling price that in line with downward trend of raw material price, ” it said.
CSC Steel said its profit before tax's better performance was mainly derived from improved margin that underpinned by both the increase in domestic sales and favourable raw material cost as well as reduce in production cost as a result of higher capacity utilisation.
For the nine months, its net profit rose by 15.6% to RM27.73mil from RM23.97mil in the previous corresponding period. Profit before tax rose by 12.5% to RM34.72mil from compared to RM30.86mil mainly due to reduction in export marketing and administration expenses as a result of decrease in export sales.
Its revenue was slightly higher by 0.2% at RM1.208bil compared with RM1.026bil mainly attributed to higher sales volume in cold rolled steel/pickled & oiled steel (CRC) products.
CSC Steel has RM220.89mil in cash and cash equivalents at end 3Q 2019 of which cash & bank balances accounted for RM20.57mil; deposits in the licensed banks RM42.99mil while the bulk of RM157.32 was in unit trust funds.
On the outlook, it said the volatility of the China-US trade war negotiations has exposed the global economy into uncertainty and instability.
“In 3Q, the prices of all steel products have shown significant decline with the sharpest decline for flat products driven by the ample supply of hot rolled (HR) coils from India, Turkey and Russia.
“Chinese mills have been trying to prevent the steel price from further falling when returning to work after China National Day “Golden Week”, but it might not be supported by weak buying sentiment and high inventory levels. It is generally believed that weak steel prices will continue to be driven by the insufficient market demand globally throughout the 4Q, ” it said.
CSC Steel said that along with the trend in international steel prices, Malaysia's market has taken the wait-and-see approach due to the uncertainty in the current steel market.
“As the biggest end consumer of steel, the construction sector has revealed a substantial fall in sales. However, according to CIDB, the growth momentum is likely to pick up by the second half of 2020 as government has approved certain projects.
“To get through the tough times, the group will adhere to prudence and conservatism, consolidate the domestic market, continue to promote the development of high-grade and high-value products, attentively to track the import dynamics to prevent unfair competition, and enhance its competitiveness among other competitors in the domestic market, ” it said.
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