Posted on 18 May 2023
Southern Steel Bhd
remains cautious over the uncertain demand and selling prices for steel in the coming months, as the projected recovery of China is not as strong as previously anticipated upon its reopening after the ending of its “zero-Covid” policy.
The steel products manufacturer added domestic demand for steel will also be muted in the absence of large infrastructure projects, as it heads towards the end of its financial year 2023 (FY23) on June 30.
Excluding a discontinued operation, Southern Steel posted a net profit of RM1.7mil or an earnings per share (EPS) of 0.28 sen for its third quarter ended March 31 (3Q23), a 47.1% year-on-year (y-o-y) plunge despite revenue having risen by 10.3% y-o-y to RM652mil.
The company attributed the higher turnover to increased sales volume, but pointed to lower selling prices for the decreased earnings.
For the nine months ended March 31, Southern Steel suffered a net loss of RM123.5mil or a loss per share of 20.7 sen, in stark contrast to the RM69.5mil net profit or EPS of 11.66 sen gained for the same period of the previous financial year, although turnover again inched up 4.3% y-o-y to RM1.8bil.
Aside from higher sales contributing to the growth in revenue while depressed selling prices pushed the company into a loss for the three quarters in review, Southern Steel said high input costs had also led to the loss incurred year-to-date.
The silver lining is that the group has managed to turn around from the net loss of RM60.7mil sustained in the preceding quarter ended Dec 31, 2022 – which represented a 103% quarter-on-quarter (q-o-q) improvement in 3Q23.
This came on turnover also growing 12.7% q-o-q for the three months ended March 31 from the RM578.6mil achieved in the preceding three months.
Southern Steel said it will continue to monitor and be responsive to market conditions and optimise operational efficiencies to improve its performance.
Source:The Star
