KUALA LUMPUR (Feb 26): CSC Steel Holdings Bhd has turned in its first quarterly net loss since 2014, as high raw material costs put pressure on its margins.

In a filing to Bursa Malaysia, the group said it recorded a net loss of RM2.08 million for the fourth quarter ended Dec 31, 2018, versus a net profit of RM14.82 million in the year-ago fourth quarter.

Revenue contracted 3.2% to RM355.50 million, from RM367.19 million previously, due to lower sales volume for galvanised steel and pre-painted galvanised steel products, accompanied by a 1.6% lower key products average selling price during the quarter.

Nevertheless, CSC recommended a final dividend of four sen per share.

CSC Steel attributed the quarterly loss to the increase in raw material costs, which it said "was difficult to pass on effectively to customers in subdued steel market conditions".

It said the losses were mainly in its key products, which are cold rolled steel or picked and oiled steel, galvanised steel, and pre-painted galvanised steel.

Consequently, CSC Steel's net profit for the full year is down 63.4% to RM21.89 million, from RM59.81 million in the previous year.

Full-year revenue, meanwhile, fell 4.5% year-on-year to RM1.38 billion, from RM1.32 billion.

CSC Steel said the increase in revenue during the year — mainly due to the increase in sales for cold rolled steel and pickled or oiled steel — was partly offset by lower sales volume for both galvanised steel and pre-painted galvanised steel.

On prospects, CSC Steel said it is "cautiously optimistic" on achieving profitability for the current year.

"The influence of politics and economic development on the steel industry may provide opportunities for reconciliation in China-US trade negotiations. The political and economic growth in Southeast Asia and the world steel demand continues to show resilience are foreseen to have positive impact on Malaysia.

"The group strives to upgrade product quality, expand the supply channels and provide good customer service to meet customers' expectations," it added.

Thinly-traded CSC Steel saw its shares close three sen or 2.5% lower at RM1.17 today, for a market capitalisation of RM432.09 million.