Malaysia-based CSC steel’s profit for Q1 ending March 31, 2020, was MYR5.01mn, up by 8.68pc from the RM4.61mn in the prior-year period. A sound product mix and cost management were drivers behind this growth. The company, however, expects weaker Q2 FY2020 results due to halt in operations for over a month.
Demand for finished steel in the country is likely to remain subdued with downstream customers like automotive, manufacturing, and construction sectors staying shut. Average selling prices for finished steel, therefore, could remain under pressure amid competitive prices from export markets.
In March, the steelmaker was affected by the government’s Movement Control Order (MCO) to control COVID-19 outbreak. Business operations were temporarily halted. Subsequently, in mid-April, the company could resume operations.
Though the company recorded a higher profit, quarterly revenue fell by 14.17pc to MYR284.27mn, from MYR331.93mn in the prior year. The rise in earnings was a result of a favourable tax rate and deferred or exempted taxes.
In the near term, the company will plan its production according to economic recovery.
Southern Steel impacted by COVID-19 outbreak
Southern Steel in its filing states COVID-19 pandemic has adversely affected its operations. The functioning of its plants, which were shuttered on March 18 due to the MCO could resume only a few days ago. Though the group obtained permissions from the Ministry of International Trade and Industry to begin operations, the management is likely to first gauge supply chain and market demand before ramping up production.
Southern Steel recorded a loss for a sixth successive quarter. The group’s net loss for the quarter narrowed to MYR37.58mn, from RM41.57mn a year earlier amid improved margins from lower inventory cost. The company’s quarterly revenue, however, fell by 32.8pc to MYR470.37mn, from MYR699.96mn in Q1 2019, due to lower sales volume and selling price.
Malaysian demand for raw materials like iron ore and ferrous scrap is likely to remain limited in the coming days.