KUALA LUMPUR (Aug 26): Steel manufacturer CSC Steel Holdings Bhd saw its net profit for the second quarter ended June 30, 2022 (2QFY22) rise 10.9% to RM17.07 million, up from RM15.43 million a year earlier.

The strong earnings performance was driven by a 60% surge in revenue, mainly due to higher sales quantity and better selling price.

Revenue for the quarter increased to RM519.6 million from RM324.48 million, its latest quarterly filing with Bursa Malaysia showed.

Cumulative net profit for the first half ended June 30 (1HFY22), however, declined 21.8% to RM29.12 million, down from RM37.26 million a year before, amid increase in production costs such as materials, labour and other variable overheads.

The group posted a higher cumulative revenue of RM974.66 million in 1HFY22, an increase of 31.6% compared with RM740.43 million in the previous year on higher steel price, despite sales tonnage being in decreasing trends.

CSC Steel is 46.3%-owned by China Steel Asia Pacific Holdings Pte Ltd. Among its top 30 shareholders include Neoh Choo Ee & Company Sdn Bhd, Dynaquest Sdn Bhd, former Lysaght Galvanized Steel Bhd managing director Liew Hoi Foo, as well as former Komarkcorp Bhd executive director Lim Pei Tiam.

Steel demand to stay sluggish in 3Q

Going forward, CSC Steel said the steel demand will remain sluggish in the third quarter due to domestic labour shortages, high inflation, postponement of projects, and the slow absorption of the previously high-priced steel stock.

Furthermore, the group said the influx of cheap steel imports and the imbalance of supply and demand keep causing steel prices to tumble.

“The overall regional market sentiment is expected to improve after the inventories are consumed at the end of the quarter, and likely to remain cautious due to market volatility.

“Barring any unforeseen circumstances, the group is cautiously optimistic to achieve profitability for the year,” it added.

CSC Steel’s share price finished up one sen or 0.84% to RM1.20 on Friday (Aug 26), giving it a market capitalisation of RM456 million. It is currently trading at a price-to-earnings ratio of 5.8 times, offering a dividend yield of 11.7%.