KUALA LUMPUR (Nov 28): CSC Steel Holdings Bhd's third quarter ended Sept 30, 2018 (3QFY18) net profit fell by 78.78% to RM2.98 million or 0.81 sen per share versus RM14.04 million or 3.8 sen per share a year ago.
The decline in profits was largely due to the increase in raw material prices and transportation cost that are greater than the increase in average selling price of the steel products.
Meanwhile revenue increased slightly by 3.35% to RM336.59 million from RM325.68 million a year ago, mainly due to higher average selling price, which was offset by reduced sales volume of certain steel products.
For its cumulative nine-month period (9MFY18), net profit dropped 46.72% to RM23.97 million from RM44.99 million due to higher raw material and transportation costs. However, revenue rose 7.4% to RM1.03 billion from RM956.07 million a year ago, primarily due to increase in average selling prices and total sales volume.
Going forward, the group said in its filing with Bursa Malaysia that the impact of the ongoing trade wars has continued to affect the supply chain of global steel industry especially in the Southeast Asian region (SEA) as steel demand in SEA has grown tremendously in the last few years.
"The group has further noticed that there are more sources and volume of steel being brought into Malaysia since middle of the year which poses an adverse effect on the market share of the local steel manufacturers as well as the steel prices.
"Hence, the local steel manufacturers are unable to sustain reasonable margin to compete with the imports. In view of the above and the lack of mega projects to support the demand of steel locally, the group foresees slow improvement in the steel demand which negatively impacting the local steel industry this year," the filing said.
Barring any unforeseen circumstance, the group is cautiously optimistic of achieving profitability for the rest of the year.
No dividend was recommended during the quarter reviewed.
CSC Steel's share price fell 3 sen or 2.65% to close at RM1.10 with a market capitalisation of RM406.24 million.