Southern Steel 4Q profit drops 44.7% to RM13.4m on lower margin

by **Cals** Wed 27 Aug 2014, 23:17

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Wednesday, 27 August 2014 14:38

KUALA LUMPUR (Aug 27): Southern Steel Bhd’s net profit dropped 44.7% to RM13.4 million in the fourth quarter ended June 30, 2014, from RM24.2 million in the previous corresponding quarter.

However, revenue inched up 1.8% year-on-year to RM723.7 million from RM710.8 million.

In a statement to Bursa Malaysia, the steel product manufacturer said the lower profit was a result of lower margin, excluding the unrealised exchange gain of RM4.5 million and the recognition of deferred income arising from tax incentive claims of RM3.7 million.

For the full-year, net profit stood at RM18.9 million, down 55.07% from RM42.2 million in the previous year, while revenue raked in RM2.81 billion was largely similar to the RM2.82 billion recorded a year earlier.

The group said the lower profit was mainly attributable to lower margins and share of higher losses in an associated company.

On prospects ahead, Southern Steel says Chinese steel products continue to be dumped into Malaysia in higher quantities through the leakages contained in various trade remedial actions.

“If these leakages cannot be closed effectively in the near future, the group will not be able to hold its modest profits in this severe scenario in the financial year ending June 30, 2015,” said Southern Steel.

The group says the Malaysian steel industry will come under even greater pressure.

The industry is now reviewing the effectiveness of these actions together with relevant government authorities, it adds.