KUALA LUMPUR (Nov 20): CSC Steel Holdings Bhd's net profit for the third quarter ended Sept 30, 2020 (3QFY20) rose 21% to RM12.72 million from RM10.53 million a year ago, despite lower revenue, as it sold more higher margin products.
Revenue dropped 13% to RM306.84 million from RM353.67 million, mainly due to a decline in cold rolled steel volume and a reduction in the products' average selling price, in line with lower raw material cost, the group said in a stock exchange filing today.
Nevertheless, it said its focus on higher margin products and the best performing product mix lifted the group's 3QFY20 profit, amid rising market demand as economic activities gradually recovered after strict movement control restrictions were lifted.
For the cumulative nine months ended Sept 30, however, the group's net profit was down 44% to RM15.57 million from RM27.74 million, as revenue sank 31% to RM712.51 million from RM1.03 billion.
This was due to business deterioration from the imposition of severe measures by the government to curb the pandemic during the March to May period, said CSC, which led to significantly low levels of productivity during the period.
Now, amid the recent resurgence in infections and the Conditional Movement Control Order being enforced in most states throughout the country, CSC said it will strive to be responsive to the impact of this on economic activities and focus on speeding up its production and delivery, to ensure customers' production will not be disrupted by the shortage of raw materials.
"Besides, we will continue to focus on cost reduction programmes and product quality upgrades to remain resilient and responsive to the dynamic market in the near future," it said.
Meanwhile, with steel prices rising in the past few months, the group expects the commodity's price to progressively enter the horizontal consolidation period.
"Any further breakthrough is depending on the rise and fall of the iron ore and the international steel market.
"At present, the piling up of iron ore and effects of uncertainty on the winter production cuts in China as well as fears of resurgence of Covid-19 cases globally are the factors that may impact the world economy growth and steel demand in the fourth quarter," it added.
CSC Steel closed three sen or 3.21% higher at 96.5 sen, valuing the group at RM356.38 million.