Southern Steel posts RM59.1m net loss in 2Q as lower selling prices erode margin

by **Cals** Thu 12 Feb 2015, 01:28

Southern Steel posts RM59.1m net loss in 2Q as lower selling prices erode margin

By Gho Chee Yuan / theedgemarkets.com | February 11, 2015 : 6:31 PM MYT

KUALA LUMPUR (Feb 11): [size=14]Southern Steel Bhd ([You must be registered and logged in to see this image.] Financial Dashboard) swung to a net loss of RM59.1 million in its second financial quarter ended Dec 31, 2014 (2QFY15) from a net profit of RM2.26 million a year ago, due to further erosion of margins from lower selling prices.

This was its second consecutive quarterly loss.

Revenue also dipped 10.33% to RM632.85 million from RM705.78 million in 2QFY14.

For the six months period (1HFY15), Southern Steel (fundamental: 0.2; valuation: 1.2) told Bursa Malaysia that its net loss widened to RM80.76 million from RM1.91 million a year ago due to further erosion of margins from lower selling prices.

Revenue for 1HY15 declined 10.14% to RM1.24 billion from RM1.38 billion a year ago.

"The losses at associated companies included our share of impairment loss of RM14 million," Southern Steel said in its filing.

On prospects, Southern Steel said excess steel production capacity which caused the oversupply globally, will continue to weigh on steel prices.

"However, with the lower trending scrap prices and other cost mitigation measures taken, the board expects the group's performance to improve in the coming quarters," it added.

In a separate filing, Southern Steel said its public shareholdings stood at 19.54% as at Jan 27, 2015, below the 20% threshold as requested by the exchange regulator.

"Bursa Securities ([You must be registered and logged in to see this image.] Financial Dashboard) had approved an extension of time of six months until Feb 28 for the company to comply with the 20% public shareholding spread requirement," it said, adding that it has yet to identify a plan to address the non-compliance with the 20% public shareholding spread requirement.

The substantial shareholders of Southern Steel include Hong Leong Manufacturing Group Sdn Bhd with a 41.46% stake, followed by Signaland Sdn Bhd 28.68% and Southern Amalgamated Sdn Bhd with 7.75%.

Southern Steel shares closed unchanged at RM1.07 today, with 60,000 shares traded. Its market capitalisation was RM448.78 million.

[size=12](Notes: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)[/size]
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