KUALA LUMPUR (Nov 19): CSC Steel Holdings Bhd's net profit for the third quarter ended Sept 30, 2021 (3QFY21) fell 21.7% to RM9.96 million from RM12.72 million in the corresponding quarter a year ago, as revenue dropped 34.4% to RM201.34 million from RM306.83 million amid production disruptions caused by the full lockdown under MCO 3.0.

"(The) nationwide lockdown under MCO 3.0 came into force on June 1, 2021, in which only 10% of the group's workforce was allowed to work in the company premises. The restrictions had severely disrupted our production and finished goods delivery activities. It was not until Aug 25, 2021 our business operation was allowed to resume at 100% workforce capacity.

"In line with the lower revenue, the group reported a lower profit before tax of RM13.2 million in the current quarter, a decrease of 17.4% compared with a profit before tax of RM15.9 million a year ago," CSC Steel said in its latest quarterly report filing.

As such, its earnings per share was trimmed to 2.7 sen from 3.44 sen previously.

Compared with the preceding quarter of 2QFY21, CSC Steel's net profit was down 35.8% from RM15.43 million, while revenue retreated 37.9% from RM324.48 million.

Nevertheless, for the cumulative nine months ended Sept 30, 2021, CSC Steel's net profit tripled to RM47.22 million from RM15.57 million, while revenue rose 32.17% to RM941.77 million from RM712.51 million. The profit improvement was associated with improved product margins, lifted by an uptrend in selling prices, CSC Steel said.

Looking ahead, CSC Steel noted the commodity supply chain was disrupted due to the continuation of the MCO 3.0 in 3QFY21.

"Despite the increase in steel prices, actual trade was weaker than in the second quarter. Steel demand and price trends in the fourth quarter are forecast to be less than expected, as the current industry boom is hindered by pandemic issues, power cuts in China, aggressive sales of hot-rolled steel from India and Russia, and a slowdown in the domestic construction industry," it noted.

"However, the economic activities are gradually opening up as the domestic pandemic is under control with the vaccination rate reaching 90%. China's strict control of steel production to achieve carbon neutrality and the gradual relief of the epidemic in India and Vietnam may stabilise steel prices, which in turn will stimulate the domestic construction industry and release steel demand," it said.

As such, the group is cautiously optimistic it would achieve profitability for FY21.

CSC Steel's share price settled one sen or 0.79% higher at RM1.27 on Friday, giving the group a market capitalisation of RM465.33 million.