KUALA LUMPUR (Dec 12): Steel manufacturer Hiap Teck Venture Bhd (KL:HIAPTEK) has reported a net profit of RM34.7 million for its first quarter ended Oct 31, 2024 (1QFY2025), compared to a net loss of RM9.43 million a year earlier. Earnings per share stood at 1.99 sen compared to a loss per share of 0.54 sen previously.

This was due to a profit contribution of RM41.98 million from its joint venture entity, compared to a loss of RM16.61 million previously, Hiap Teck's bourse filing on Thursday showed. The improvement was due to higher sales volume and favourable foreign exchange movements, it noted.  

Quarterly revenue, however, slipped 1.4% to RM401.72 million from RM407.51 million in 1QFY2024, impacted by lower average selling prices. The group also recorded a loss from operations of RM2.62 million, compared to a profit of RM13.29 million previously, due to compressed margins resulting from the downward trend in steel prices.

No dividend was declared for the quarter.

On a quarter-on-quarter basis, Hiap Teck's net profit fell nearly 27% from RM47.59 million in 4QFY2024, primarily due to lower steel prices. This was despite a 3.57% increase in revenue, which rose from RM416.57 million.

Loss from operations widened to RM2.62 million during the quarter from a profit of RM6.9 million in the preceding quarter, largely due to the downward trend in steel prices, which pressured profit margins.

Looking ahead, Hiap Teck cautioned that the global steel market may continue to face significant challenges due to subdued demand in China, driven by ongoing weakness in its real estate and manufacturing sectors, as well as potential policy shifts and tariff increases in the US under the incoming administration.

“The impending carbon tax on the steel industry, announced in Budget 2025 and set for implementation by 2026, presents both challenges and opportunities,” Hiap Teck added in its filing. “The upstream joint venture entity is closely assessing how to align with these new environmental regulations, which could impact operational costs.”

Hiap Teck added that the scheduled production of its joint venture entity’s 1450mm hot rolled coil in 1QFY2025 is expected to enhance its product portfolio and strengthen competitiveness in both domestic and regional markets.

“While the downstream scaffolding business continues to show strong growth and the manufacturing sector is on the path to recovery, the trading division remains under pressure due to subdued steel prices. Nevertheless, the recent stabilisation of prices, driven by China’s stimulus measures, brings a cautiously optimistic outlook for the near future,” the group said.  

Shares in Hiap Teck closed half a sen or 1.45% higher at 35 sen on Thursday, giving the group a market capitalisation of RM602.96 million. Year to date, shares in the company have declined by 16.67%.