Leon Fuat's 3Q profit comes in five times higher y-o-y amid higher prices for steel products

TheEdge Tue, Nov 30, 2021 01:57am - 1 year View Original

KUALA LUMPUR (Nov 29): Leon Fuat Bhd's net profit jumped to RM38.67 million for the third quarter ended Sept 30, 2021, over five times the RM6.75 million it made in the same quarter a year ago, thanks to higher average selling prices (ASP) for its flat carbon steel, other flat steel and long carbon steel products.

The group's revenue grew 44.13% to RM236.11 million, from RM163.82 million, its bourse filing showed. Earnings per share spiked to 11.34 sen, from 2.18 sen. No dividend was declared.

In a statement, Leon Fuat said revenue from the trading of steel products grew 65.7% to RM92.81 million during the reporting quarter, while revenue from the processing of steel products rose 32.6% to RM141.22 million.

The trading segment's contribution to revenue stood at 30.2% in 3QFY21, compared with 34.9% in 3QFY20, while the processing segment's contribution stood at 59.8% compared with 65% previously, it added.

For its nine months ended Sept 30 2021 (9MFY21), Leon Fuat's net profit jumped to RM106.91 million, more than 10 times the RM10.47 million it made in 9MFY20, while revenue rose 61.9% to RM632.37 million, from RM390.61 million. Earnings per share increased to 32.71 sen, from 3.38 sen previously.

“Generally, our business was not severely affected by the movement restrictions in 9MFY21, while higher overall revenue, together with higher gross profit margins supported our financial performance.

“However, we note that while there is potential rebound in domestic economic activities that will lead to recovery in the coming quarter, we will manage the continuing risks from supply disruptions persistently, amid a resurgence in Covid-19 infections in certain economies," the group's executive director Calvin Ooi Shang How said.

The group also said it is taking proactive measures to ensure business continuity and sustainability, given the volatile business landscape.

“These measures include keeping vigilant on steel price movements and related foreign currencies, taking proactive measures including negotiating forward contracts where necessary, as well as prudent inventory management, while continuously enhancing the operating capabilities and efficiencies to meet customers’ requirements and keeping our operating costs at a manageable level,” Ooi added.

Leon Fuat shares closed half a sen or 0.63% higher at 80 sen on Monday (Nov 29), giving the steel manufacturing and trading group a market capitalisation of RM271.09 million.

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