Posted on 30 Nov 2018
Higher material and energy costs melted 96.7% of Southern Steel Bhd’s earnings in the first quarter ended September.
It was not the best start to a new financial year for the steel manufacturer as it turned in a net profit of RM1.79 million for the quarter, significantly lower than the RM53.42 million in the same quarter last year.
Earnings per share fell to 0.41 sen, from 12.42 sen in 1QFY18.
This was in spite of a 3.3% growth in its revenue to RM929.04 million from RM899.75 million in the corresponding quarter a year ago.
In a bourse filing, the group said: “The increase in selling prices was not sufficient to cover the higher material cost and energy tariff hike [and] this has resulted in lower margin and profit for the quarter under review”.
It warned of the soft market and slower construction growth ahead as infrastructure projects are in the midst of being reviewed by the Government, but said it will continue to adopt measures to mitigate eroded margins.
Southern Steel slipped one sen lower to 99 sen — the lowest level since September 2016 — valuing the Hong Long Group-controlled company at RM429.31 million.
Year-to-date, the stock has lost more than half of its value as it traded at RM2.21 on Dec 29, 2017.
