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Home / 2013 Annual Report: Managing Director/CEO’s Statement

FY2013 Overview

Amidst the tough operating environment of 2013 – where the global steel industries grappled with reduce operating margins. I am pleased to note that Masteel stood on solid footing in FY2013.

Our established position in the Klang Valley and strong track record for timely delivery of quality steel products placed us in favourable position to meet rising steel bar requirements in the domestic market. Notably, the Group effectively captured higher market share of steel bars in the year, as the construction of major infrastructural projects such as Klang Valley MRT and LRT extensions were being progressively implemented.

This enabled the Group to register RM1.38 billion in revenue for FY2013, increasing 4.8% from previous year and the highest in the Group’s corporate history.

Unsurprisingly, the domestic market represented 92.4% of FY2013’s revenue, with RM1.27 billion in sales. This was 16.6% higher than RM1.09 billion a year ago.

The balance RM103.85 million of FY2013 group revenue was contributed by export sales, reducing from RM221.74 million a year ago, on the back of keener international competition.

Nonetheless, Masteel kept its focus on honing our strategic advantage on home ground, through our constant efforts to improve the operational efficiency and utilisation rate of our plants, thus enhancing our operating income to achieve better profitability.

Masteel ended FY2013 positively with strong net profit of RM27.01 million.

Growth Strategies

As Malaysia surges forward as a rapidly-developing country, we foresee that the domestic market will be in great need of steel bars for the purpose of infrastructure and housing construction.

Over the years, Masteel has progressively pursued the expansion of our production capacities to better meet the demands from ongoing developments locally and in the region.

In FY2013, we expanded the production capacity of our billet plant in Bukit Raja, Klang by 50,000 metric tonnes (MT) to reach 650,000 MT per year, from 600,000 MT previously. This upgrading work will continue for our meltshop to reach a production capacity of 700,000 MT steel billets per year, which is scheduled for completion at the end of 2014.

Furthermore, we are also in the process of constructing a second rolling mill in Bukit Raja, which is slated to be ready by mid-2015. This will take our annual total steel bar capacity from 400,000 MT in FY2013 to 550,000 MT in 2014.

We are confident these strategies would become key pillars that will strengthen the Group’s profits.

Corporate Updates

  • Joint-Venture Agreement with KUB Malaysia Berhad

Masteel remains committed to the joint-venture company with KUB Malaysia Berhad, Metropolitan Commuter Network Sdn Bhd (MCN), to co-operate in pursuing the rail transit network project interlinking the Iskandar Development Region and Woodlands, Singapore.

MCN is in active discussions with various Federal & State government ministries and agencies, as well as financial institutions with regard to the next steps for the project.

It should be noted that the MCN project involves extensive coordination with multiple stakeholders, therefore a project of this scale would understandably incur considerable time for planning and implementation. Further updates will be made via announcements to Bursa Malaysia.

Prospects

The Budget 2014 announcement aptly demonstrates the Malaysian Government’s commitment to continue rolling out of major infrastructure projects and iconic developments such as the KVMRT, LRT and highway extensions, High Speed Rail, Bandar Malaysia as well as Tun Razak Exchange.

The Government also reiterated its stance to provide affordable homes, resulting in the construction of approximately 80,000 affordable residences nationwide under PR1MA, as well as the provision of incentives for property developers to build homes catering to mass market.

The ongoing transformation of the Greater Klang Valley region into a world-class metropolis paints a robust outlook for the construction and property development sectors in Malaysia, translating into buoyant prospects for steel products manufactured by Masteel Bhd.

Our factories’ strategic location in the Klang Valley marks a proven competitive advantage and places us within the thriving hub where the major anticipated uptake in steel bar demand is centered.

Our RM100 million investment in capital expenditure to build up new capacity in our core business will allow us the flexibility to meet existing and expected future demand, as well as pave the foundation to expand our market share.

Even so, our management team is mindful of the challenges in the industry, including rising electricity tariffs and other costs, and will strive to enhance cost-efficiency in all our operations. We are optimistic that these measures will go a long way towards not only mitigating the higher-cost environment but also improving our industry position.

All said, we are confident of our future prospects, and will aim to continue playing our role as a prominent player in
the Malaysian steel industry.

Awards

Bearing testimony to our brand excellence and shareholders’ value creation in Malaysia’s steel manufacturing sector, Masteel was awarded the “Best Brands Awards 2012-2013 in Manufacturing – Steel” by The BrandLaureate. This was accentuated with the concurrent receipt of the “Brand Personality Awards 2012-2013”, cordially accepted in my professional capacity as Masteel’s Managing Director/Chief Executive Officer.

Dato’ Sri Tai Hean Leng @ Tek Hean Leng
Managing Director/Chief Executive Officer

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