Friday 29 Mar 2024
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KUALA LUMPUR (June 29): Steel maker Hiap Teck Venture Bhd has turned a profit in its third financial quarter ended April 30, 2016 (3QFY16) following six successive quarters of net losses. It booked a net profit of RM10.59 million or 1.49 sen per share compared with a net loss of RM5.19 million or 0.73 sen loss per share a year ago.

In a filing with Bursa Malaysia today, Hiap Teck said better selling prices in the quarter under review had led to improved gross profit margin, thus resulting in better profit.

The profit registered in 3QFY16 is due to share of profit contributed from its jointly controlled entity, Eastern Steel Sdn Bhd, as compared to a share of losses in previous corresponding quarter.

Hiap Teck owns a 55% stake in Eastern Steel, while Orient Steel Investment Pte Ltd owns 40% and Chinaco Investment Pte Ltd the remaining 5%.

This was despite Hiap Teck's revenue falling 14.9% to RM285.05 million in 3QFY16, from RM335.05 million in 3QFY15.

In the cumulative nine-month period (9MFY16), Hiap Teck still incurred a net loss of RM49.44 million or 6.93 sen loss per share from RM8.43 million or 1.19 sen loss per share in 9MFY15, while revenue dropped by 7% to RM877.52 million from RM943.62 million.

Moving forward, Hiap Teck noted that world steel prices have shown improvement after the Chinese government introduced measures to shut down loss-making and obsolete steel plant.

"It is widely accepted that the recent price hike was attributed by China's lower production capacity. However, the global steel prices still remain volatile," it said.

"Should there be no significant change in global steel demand, any increase in steel supply will affect steel prices and some of the increases secured earlier could evaporate," it warned.

In view of this, Hiap Teck said it has implemented more stringent control on the group's procurement and inventory management.

Domestically, Hiap Teck said the development and infrastructure projects under the 11th Malaysia Plan will lead to increase in demand for steel products and building materials.

The group added that it is optimistic that demand for steel products will surge in the local market with the rolling out of the mega projects such as Mass Rapid Transit Line 2 and Light Rail Transit Line 3.

"The group will also continue to actively enhance its productivity and efficiency and to increase its competitiveness in the industry," said Hiap Teck.

Hiap Teck shares fell half sen or 2.38% to close at 20.5 sen today, which is near its all-time low of 20 sen recorded on Feb 11 this year. It has a market capitalisation of RM146.15 million.

 

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