CSC Steel earnings surge in 1Q

CSC Steel earnings surge in 1Q

KUALA LUMPUR: CSC Steel Holdings Bhd’s earnings surged to RM30.59 million in the first quarter ended March 31, 2010 from RM5.71 million a year ago following favourable prices for steel products and it expects to continue to stay profitable this financial year.

It reported on Friday, May 7 that revenue rose 63% to RM281.59 million from RM173.16 million a year ago. Earnings per share were 8.2 sen versus 1.53 sen.

“The better performance in revenue is driven by higher sales volume and favourable selling prices of our steel products. The improvement in revenue has increased the profit before tax as well,” it said.

When compared with the fourth quarter ended Dec 31, 2009, CSC said revenue increased by 2.9% from RM273.7 million to RM281.6 million mainly due to higher sales volume of its steel products.

“Despite the higher revenue, profit before tax reduced by RM3.8 million or 8.9% to RM39.1 million. This is mainly due to the lower selling prices of our steel products for the quarter under review,” it said.

On the prospects, CSC said although the selling prices of its steel products for this quarter were lower than for the preceding quarter, the steel market had performed credibly in the first quarter of 2010 and steel prices were rising progressively as the global economy move towards positive growth and out of the economic recession.

“As the prices of raw materials such as iron ore and coal have risen significantly, it would certainly be the main driver for the steel prices to move upward. Although steel prices in the domestic market are expected to follow the upward trend, however, it would be a challenging task for the company to pass on the increased costs to the downstream customers,” it said.

CSC said as for the rest of this year, under the present rational market conditions, both the supply and demand of steel were not expected to experience great volatility.

It said small healthy corrections in prices may be inevitable but in the long run, the market trend was moving up gradually due to the cost push pressure from increasing raw material prices a result of limited resources and oligopoly in the iron ore industry.

“Barring any unforeseen circumstances, the group is cautiously optimistic that the second quarter and the rest of 2010 will continue to be profitable,” it said.

*上面的图表是原自糊涂兄的