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Home / 2005 Annual Report: Chairman’s Statement

FINANCIAL PERFORMANCE

The Year 2005 proved to be a challenging 12-month for Malaysia’s steel industry marked by lower steel demand due to continuous contraction of the local construction industry and fluctuation in global steel prices.

Despite the challenging environment, Masteel recorded a revenue growth of 9.1% to RM306.4 million, and a Profit Before Tax of RM23.3 million, which was marginally lower than the adjusted Profit Before Tax of RM24.1 million for 2004.

SUSTAINED PROFITABILITY & DIVIDEND PAYMENT

The result of sustained profitability was achieved on the back of several strategic moves.

Since the second half of year 2005, the management has put in place aggressive cost-cutting measures ranging from switching to lower cost fuel type to investment in technology to reduce electricity consumption and increase production capacity.

With funds raised from the initial public offering, the company’s borrowing was lowered, thereby reducing the overall gearing to about 0.56. In terms of exports, a total of 21% of our products was sold to overseas markets, which includes new markets like Vietnam and Thailand last year.

In view of sustained profitability, the Board of Directors has proposed a dividend payment of 1.5 sen per share, which is not tax exempted for the financial year under review.

POSITIVE OUTLOOK FOR 2006

Looking forward, I am pleased to say that the outlook for Malaysia’s steel industry in 2006 is positive.

The Ninth Malaysia Plan announced by our Prime Minister on 1 April 2006 is expected to boost the local construction industry for the next five (5) years. This prospect will augur well for the steel industry, which will see an increase as well as stable demand for construction-based steel products in the next few years.

At Masteel, we will continue our efforts to reduce cost of production through the deployment of latest technology, and to intensify sales in the local and export markets.

ACKNOWLEDGEMENTS

With the positive outlook, I am confident that the management and staff of Masteel will continue to achieve sustained profitability, if not better results in year 2006.

I would like to take this opportunity to express my appreciation and gratitude to the management and staff for their commitment and efforts last year, and many thanks to our customers, business associates as well as the Government and regulatory bodies for their continuous support and guidance.


SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

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