KUALA LUMPUR: Steel products manufacturer, Leon Fuat Bhd posted a lower net profit of RM23.9mil in the first quarter ended March 31, from RM36.12mil a year prior.
Its revenue for the quarter rose by 29.1% increase in revenue to RM273.02mil compared with RM211.48mil recorded in the same quarter last year.
The increase in revenue was mainly due to an increase in revenue for trading and processing of steel products by 21.1% from RM74.29mil to RM90mil and by 33.4% from RM137.11mil to RM182.93mil respectively.
Executive director Calvin Ooi Shang How said it recorded higher revenue overall due to higher average selling prices for both trading and processing but this was partially negated by the 8.8 percentage point decrease in overall gross profit margin to 16.4% in the quarter under review compared with 25.2% gross profit margin in the corresponding quarter of the preceding financial year.
"We continue to seek avenues to diversify as we have done through investing in welded steel pipe production in 2018. Phase 1 of the facilities with two production lines is operational while a further two production lines are being installed and expected to be operational in Q222.
“We have also begun Phase 2 of the facilities that we expect to be fully commissioned in the second-half of 2023 which will ultimately increase our production capacity,” he said in a statement.
Ooi said its outlook for 2022 remained unchanged as global growth is expected to slow significantly this year largely due to the conflict in Ukraine that has rippled across commodity markets, trade and to some extent financial interlinkages.
"Given that downside risks have risen significantly, we have increased monitoring of steel price movement and related foreign currencies and will take proactive measures including negotiating forward contracts, where necessary, as well as prudent inventory management, to reduce any negative impact which may arise.
“We will continue to enhance the operating capabilities and efficiencies in meeting customers' requirements and to ensure timely satisfaction of customer orders while keeping our operating costs at a manageable level,” he added.