This article first appeared in The Edge Financial Daily on February 13, 2018

KUALA LUMPUR: CSC Steel Holdings Bhd’s net profit more than doubled to RM14.82 million in the fourth quarter ended Dec 31, 2017 (4QFY17), from RM6.19 million in the corresponding quarter a year ago, as it enjoyed higher sale margins for all its steel products.

This was a result of a significant rise in selling prices, together with a lower increase in production costs, the group told Bursa Malaysia in a filing yesterday.

Quarterly revenue grew 28% year-on-year to RM367.2 million from RM286.9 million, primarily due to the significant rise in the selling price of its steel products, and a marginal increase in sales volume.

The group proposed to pay a final single-tier dividend of five sen per share in respect of FY17, pending shareholders’ approval.

For the full FY17, the group’s net profit fell 13% to RM59.8 million from RM68.7 million in FY16 despite revenue growing 28% y-o-y to RM1.32 billion from RM1.04 billion.

CSC said the lower y-o-y bottom line was mainly due to higher production costs as a result of higher raw material costs and overheads, inventory write-downs of RM2.5 million, and higher distribution costs due to increased exports.

Moving forward, CSC said steel prices are expected to remain firm until the first half of 2018, driven by increasing prices of steel-making raw materials like iron ore and coking coke, coupled with China’s continued efforts in shutting down its rudimentary and polluting steel mills.

But it said the steel market for the second half of the year will become less predictable and very much dependent on actions taken by the US under President Donald Trump’s administration on the outcomes of the country’s foreign steel dumping investigation.

As such, CSC is cautiously optimistic about achieving profitability in FY18.

CSC shares closed one sen or 0.67% higher at RM1.51 yesterday, giving it a market capitalisation of RM565 million.