Posted on 23 Aug 2016
Southern Steel Bhd posted a sharply wider net loss of RM112.68 million or 26.86 sen per share for the fourth quarter ended June 30, 2016 (4QFY16), due to a RM141 million write-off of property, plant and equipment of a subsidiary. This is the company’s biggest loss since eight years ago, when it reported a net loss of RM259.85 million for 4QFY08.
The steel maker reported a net loss of RM1.24 million or 0.3 sen per share for 4QFY15.
In a filing with Bursa Malaysia yesterday, the group said revenue was 3.2% lower at RM590.88 million from RM610.66 million in 4QFY15.
Southern Steel said the RM141 million write-off was a result of Southern Steel’s wholly-owned subsidiary, Southern HRC Sdn Bhd, terminating a contract signed with Danieli & C Officine Meccaniche SpA in July.
Southern Steel had previously reported that the contract was terminated as Danieli failed to remedy and resolve the issues set out in the notice of termination.
Recall that the contract, which was signed on June 16, 2011, was for the design, manufacture and supply of a “Thin Slab Casting Unit feeding directly a twin Steckel Mill” for the production of hot rolled coil.
The huge quarterly net loss brings the group’s full-year net loss for FY16 to RM221.15 million or 52.73 sen per share, versus RM117.58 million or 28.03 sen per share in FY15. Revenue fell 5.1% to RM2.4 billion from RM2.53 billion.
Going forward, Southern Steel said the market remains volatile as the outcome of the safeguard measure petitions against the imports is still pending whilst the threat of cheap imports from China continues.
Nevertheless, it expects better operating performance for FY17 with sustained efficiency efforts and firmer selling prices.
Shares in Southern Steel closed down two sen or 1.89% at RM1.04 yesterday, with a market capitalisation of RM436.19 million.
