KUALA LUMPUR (May 18): Two listed steel companies, CSC Steel Holdings Bhd and Southern Steel Bhd, managed to post improved financial results in the January-March quarter, although the period included the first two weeks of the Movement Control Order (MCO).

For CSC Steel, a better product mix and cost management resulted in its net profit for the first quarter ended March 31, 2020 rising 8.68% to RM5.01 million, from RM4.61 million a year earlier.

Despite the higher profit, quarterly revenue fell 14.17% to RM284.27 million, from RM331.93 illion previously.

The group, whose major shareholder is Taiwan’s China Steel Corp, attributed this to the temporary halt of business operations due to the MCO, combined with the drop in average steel prices, following lower raw material costs.

“The company will adhere to the government regulations, ensure the safety of the employees, and work closely with downstream, in order to get through this difficult time. 

“We shall also cooperate closely with our customers to overcome the economic tsunami. In the meantime, production planning will be more flexibly adjusted according to market and economic recovery,” CSC Steel said in a filing to Bursa Malaysia.

Meanwhile, Southern Steel, remained in the red for the third quarter ended March 31, 2020, despite an improvement in overall financial results.

This marks the group’s sixth consecutive loss-making quarter.

The group’s net loss for the quarter narrowed to RM37.58 million, from RM41.57 million a year earlier, as margin improved from lower inventory cost.

Quarterly revenue was down 32.8% to RM470.37 million, from RM699.96 million previously, due to lower sales volume and selling price.

For the cumulative nine-month period, Southern Steel reported a wider net loss of RM418.12 million, versus RM84.2 million in the previous corresponding period.

Nine-month revenue fell 29.73% to RM1.71 billion, from RM2.44 billion previously.

The group attributed the large loss during the period mainly to an impairment loss of RM258 million recognised on plant and equipment including spares, relating to
the group’s hot-rolled coil investment.

Southern Steel said in its filing that the Covid-19 pandemic has adversely affected its operations. 

The group’s plants, which were shut down on March 18 due to the MCO, are now able to commence operation.

“Although the group has recently obtained permissions from the Ministry of International Trade and Industry to begin operation, the management will have to fully understand the supply chain and market demand before production can be stepped up,” said Southern Steel.

Thus, the board has decided to suspend all views on the prospects of the group until such time that the overall impact of Covid-19 on the group becomes clearer, it said.

In the meantime, the management’s focus is to conserve cash within the business and to this end, all senior managers have agreed to a voluntary reduction in base
salary and continued to explore ways to reduce cost, it added.

CSC shares finished 1.5 sen or 2.03% higher at 75.5 sen today, giving the group a market capitalisation of RM286.90 million. 

Southern Steel’s shares rose two sen or 4.26% to 49 sen, valuing the group at RM292.19 million.