Malaysia Steel Manufacturer   

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Quarterly Earnings: Archive 2010

Thursday, July 28th, 2011
Quarterly Summary (RM’mil) 2008 2009 2010
Financial Year Ended 31 Dec
1Q
2Q
3Q
4Q
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Revenue
174.4
280.9
264.3
161.7
130.1 169.8 195.7 191.7 192.1 235.7 285.0 292.0
PBT 20.8
41.0
18.2
5.8
(30.4) (2.0) 13.4 10.6 6.7 8.3 5.4 9.7
PATMI
19.4
37.9
16.7
5.5
(30.4) (2.0) 13.4 10.6 6.4 8.1 4.8 9.0
Basic EPS (sen)
13.11
25.99
10.98
3.32
(15.64) (1.01) 6.86 5.44 3.26 4.06 2.35 4.35

1Q10 Financial Results

2Q10 Financial Results

3Q10 Financial Results

4Q10 Financial Results


2004 Annual Report: Managing Director/CEO’s Statement

Tuesday, February 1st, 2011

PERFORMANCE REVIEW

For the financial year under review the Company recorded a turnover of RM280.8 million and a pre-tax profit of RM35.9 million. Compared to Year 2003’s turnover of RM242.4 million and Profit Before Tax (PBT) of RM19.6 million, the Financial Year 2004 represented an increase of 15.8% on turnover and 83% increase in PBT, of which a write-back of electricity in arrears accrual in previous years amounting to RM11.8 million was included. This resulted in a 23% increase in profit margin as compared to Year 2003.

In addition, the Company has out-performed its profit projection stated in its initial public offerings (IPO) prospectus. Compared to the forecast turnover of RM230.3 million, we achieved an actual turnover of RM280.8 million, exceeding the projection by a marked 22%. As for the Profit After Tax (PAT) of RM24.1 million (net of TNB write-back for electricity arrears), it exceeded the forecast PAT of 22.4 million by a good 8%.

OPERATION REVIEW

In terms of plant capacity, we saw an improved utilisation for steel billets from 58% in Year 2003 to 62% in Year 2004. This had resulted in greater economy of scale for billets production. For steel bars we maintained the same utilisation rate at 67% for both years.

The average steel selling pices increased from RM1,214 per metric tonne (MT) to RM1,570/MT, representing an overall increase of 29%. Likewise, the average selling price for steel billets had also increased from RM875/MT to RM1,294/MT or 48% increase as approved by the Government since April 2004.

MSW has also successfully produced its first batch of Grade 12K premium billets for the production of highgrade wire rods for a reputable client in Sarawak.

CORPORATE DEVELOPMENT

On 7th February 2005, the Company was listed on the Main Board of the Bursa Malaysia Securities Berhad. The IPO was oversubscribed 38 times from the original target of RM30.3 million.

FUTURE OUTLOOK

The first quarter of Year 2005’s performance is expected to be slow due to the festive season and the repatriation of foreign workers in the construction industry. However, looking forward, the Company anticipates a much better outlook for the second, third and fourth quarters, supported by the following factors:-

1.Construction Industry Boost

The Government recently announced its decision to bring forward 26 projects under the 9th Malaysian Plan for immediate implementation. These projects worth RM2.4 billion will strongly boost the local construction industry, and will increase the domestic demand for steel.

2. Positive Economic Outlook

The Bank Negara Malaysia projected a GDP growth of 5% to 6% for the Year 2005. This will be driven mainly by private sector consumption and investments.

3. New Export Markets

On the export side, MSW aims to export its steel products to new markets, such as Thailand and Indonesia.

4. Anticipation of Higher Steel Prices

Recent high demand for steel in China has resulted in significant price hikes in iron ore by as much as 71.5% and in coal by 100%! The Chinese government has also removed the 13% tax rebate for steel exporters in China thereby increasing the price of billets. This would translate to higher steel prices, which is to be anticipated.

With the possibility of a further increase in steel prices, the Board is cautiously optimistic of the Company’s performance in Year 2005.

ACKNOWLEDGEMENTS

On behalf of the Board, I wish to express our deepest appreciation to our shareholders, customers and associates for the continuous trust and support for the Company. On the same note, the Board and I would like to extend our thanks and gratitude to our management and staff for their dedication and commitment.


TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

2004 Annual Report: Chairman’s Statement

Tuesday, February 1st, 2011

FINANCIAL PERFORMANCE

The year ended 31st December 2004 was marked by the best financial results in the history of the Company in terms of turnover since its incorporation in 1971.

The Company turnover recorded a stronger year-on-year growth of 15.8% from RM242.4 million to RM280.8 million as compared to Year 2003. The Company has also achieved a Profit After Tax (PAT) of RM35.9 million, up from RM19.6 million in the previous year. The increase in PAT was mainly due to the write-back of electricity in arrears accrual by Tenaga Nasional Berhad from past years’ operations, amounting to RM11.8 million.

HIGHER STEEL PRICE & EXPORT MARKET

Two main factors contributed to the Company’s remarkable performance. They were the higher prices of steel bars and billets approved by the government in April 2004, and the increase in the exports of steel billets to ASEAN countries.

FORECAST TO BE ACHIEVABLE

The Company has successfully initiated its strategies to ensure the continuous growth of the company for the forthcoming years. Subject to the influence of growth effects from both the global and Malaysian economies, we are cautiously optimistic that the Company will achieve its forecast goals for the Year 2005.

ACKNOWLEDGEMENTS

I am confident that the management and staff of Malaysia Steel Works (KL) Bhd will show their resilience and rise to the occasion to achieve the projected profit for Year 2005. I would like to express my gratitude for their efforts and commitment in the past year, and many thanks to the support and loyalty of our customers, suppliers and business associates.


SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

2005 Annual Report: Managing Director/CEO’s Statement

Tuesday, February 1st, 2011

PERFORMANCE REVIEW

For the year under review, the business environment in which the local steel industry operated in was more challenging as compared to the previous year. Overall demand of steel decreased and cost of raw materials and freight was affected by fuel price hike.

Against this background, Masteel achieved a turnover of RM306.4 million and a Profit Before Tax of RM23.3 million for the financial year ended 31 December 2005.

Compared to the previous year, the Company’s revenue grew 9.1% from RM280.8 million, while Profit Before Tax decreased 35.1% from RM35.9 million, which included a RM11.8 million write-back of electricity arrears accrual in previous years. Not considering the write-back, the actual year-to-date reduction in Profit Before Tax was 3.3%.


OPERATION REVIEW

In terms of operation, the year was marked by strategic implementation of cost-cutting measures to increase both cost-efficiency and productivity in the manufacturing of our steel products. The objective was to utilise the best plant and process technology to produce quality steel products at the lowest production cost.

For our meltshop facilities in Bukit Raja, Klang, we had in earlier months of 2005 upgraded all existing machinery to be adapted to use natural gas. In June, the switch from liquefied petroleum gas to natural gas was successfully commissioned. This strategic move was expected to reduce the cost of production by about 10% per annum.

In August, an agreement was signed with Danieli & C SpA of Italy to provide the plant with the latest Supersonic Lancing System (SLS) technology, which would effect in a reduction in production cost by about 5%, and an increase in production capacity by 10% per annum. The technology will be fully utilised in the Bukit Raja plant by second half of 2006 to further enhance our operation’s competitiveness.

OUTLOOK

The Malaysian Iron & Steel Industry Federation (MISIF) forecast the local steel industry to grow by 8% in 2006, based on recovery of construction sector. The overall outlook for 2006 is positive, as supported by the following factors:

1.Construction Industry Recovery

Under the Ninth Malaysia Plan, the Government has recently announced allocations of RM48.6 billion and RM18.4 billion for the development of infrastructure and housing projects respectively. The implementation of the plan, which will start in 2006, is expected to boost the local construction industry at an average of 3.5% for the next five years.

The steel industry is looking to benefit from the positive growth and re-bound of the construction industry.

2. Positive Economic Outlook

The Bank Negara Malaysia projected a strong GDP growth of 6% for the year 2006, underpinned by stronger exports and resilient local demand.

3. Anticipation of Higher Steel Prices

Due to positive outlook in the construction sectors of ASEAN region, prices of steel is on the upswing in the first quarter of 2006. Overall, international steel price increased by 20% in the quarter.

In anticipation of a further increase in steel prices, the Board of Directors is cautiously optimistic of the Company’s performance in 2006.

ACKNOWLEDGEMENTS

After a year of challenges, I wish to thank all the management and staff at Masteel for their contribution to our performance in 2005. On their behalf, I would also like to thank our customers and shareholders for their trust and support, as we continue to put our efforts to build a stronger Masteel for tomorrow and the long term.


TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

2005 Annual Report: Chairman’s Statement

Tuesday, February 1st, 2011

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

2006 Annual Report: Managing Director/CEO’s Statement

Tuesday, February 1st, 2011

PERFORMANCE REVIEW

For the financial year ended 31 December 2006, the Company recorded a revenue of RM362.2 million and a profit after tax of RM30 million. As compared to the previous year’s turnover of RM306.4 million and post-tax profit of RM23.3 million, the financial year under review achieved an increase of 18% in revenue and 29% in earnings respectively.

In tandem with the steady growth in revenue and earnings, the Company’s earnings per share also grew by 27% from 17.78 sen to 22.56 sen during the reviewed period.


OPERATION REVIEW

In terms of operation, the year saw the completion of strategic implementation of cost-cutting measures, and the realisation of tangible benefits from these implementations as reflected in the financial year’s positive results.

Since 2005, we had invested in new technology to increase both cost-containment and improvement of productivity in the manufacturing of our steel products, so as to further enhance our operation’s competitiveness.

For our meltshop facilities in Bukit Raja, Klang, we had upgraded all existing machinery to adapt to natural gas usage. This strategic move has helped to reduce the cost of production by about 10% last year.

The 4th strand caster and other upgrades were also fully implemented in the Bukit Raja plant by second quarter of 2006, resulting in a reduction in production cost and increase in production capacity by 10 percent per annum respectively.


CORPORATE DEVELOPMENT

On the corporate front, the Company completed a Private Placement exercise of 13 million new shares on the Main Board of Bursa Malaysia Securities Berhad on 29 January 2007.

OUTLOOK

Going forward into 2007, the performance of the Company is expected to further improve, barring any unforeseen circumstances, with the government’s recent adjustment increasing the prices of steel bars and billets by 20%.

The Malaysian Iron & Steel Industry Federation (MISIF) forecast the local steel industry to grow by 10% in 2007, based on continuous recovery of construction sector. The overall outlook for 2007 is positive, as supported by the following factors:

1. Positive Economic Outlook

The Bank Negara Malaysia projected a continuous and steady GDP growth of 6% for the year 2007 with the construction, services and agriculture sectors being identified as three key sectors of growth.

2. Construction Industry Recovery

The construction sector is projected to turn around in 2007 to register a growth of 3%, against a contraction of 0.5% in 2006.

Under the Ninth Malaysia Plan, the Government has allocated up to RM10 billion for the development of Southern Corridor in the State of Johor, which includes the development of a special economic zone known as the Iskandar Development Region. The implementation of the plan, which will start in 2007, is expected to boost the local construction industry.

The steel industry is looking to benefit from the positive growth and re-bound of the construction industry.

3. Export Potentials

Singapore’s highly profiled casino/resorts mega-project development plan will also augur well for Malaysia’s steel industry due to our proximity to the island city.

4. Foreign Exchange

The strengthening of the Malaysian Ringgit against the US Dollar will reduce the cost of imported materials necessary for our manufacturing process, thereby benefiting our overall cost of production.

ACKNOWLEDGEMENTS

I would like to take this opportunity to thank all employees of the Company for their commitment, dedication and contribution in continuing to improve the Company’s performance. On behalf of all members of the Company, I also want to thank our customers, business associates and shareholders for their valued support and continuing confidence in the Company and its management team.


DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

2006 Annual Report: Chairman’s Statement

Tuesday, February 1st, 2011

On behalf of the Board, I am pleased to present the Annual Report and Financial Statements of Malaysia Steel Works (KL) Bhd (“Masteel”) for the year ended 31 December 2006.

OVERVIEW

According to the Bank Negara Malaysia economic performance report, Malaysia’s economy strengthened in 2006 with a 5.9% expansion in real gross domestic product (GDP). Both the services and manufacturing sectors continued to be the main drivers of growth. The construction sector saw a gradual recovery registering a positive growth by the final quarter of the year.

Domestic demand for steel in 2006 grew in tandem to the moderate growth in manufacturing and construction sectors. Overall, steel was traded at higher prices in the year due to increase in global steel prices.

The Southeast Asia region saw a significant reduction in supply of steel from China as a result of the country’s tightening controls on steel exports. This drove ASEAN member countries to source steel supplies within the region.

FINANCIAL RESULTS

For the financial year ended 31 December 2006, Masteel reported a 18% year-on-year increase in revenue to RM362.2 million and an 29% year-on-year increase in profit after tax to RM30 million.

The healthy growth in both revenue and earnings was contributed by a combination of factors, namely the increase in domestic and regional demand of steel, higher selling prices, and onset of cost savings from production during the period.

DIVIDEND PAYMENT

In respect of the positive financial results, the Board is pleased to recommend a first and final dividend of 2.1 sen per share less 27% taxation totaling RM2,238,180.00 for the financial year ended 31 December 2006.

This proposed dividend is subject to the approval of shareholders at the Company’s forthcoming Annual General Meeting.

OUTLOOK

The surge of global steel consumption and steel prices are expected to lead the industry into a more interesting business environment in 2007.

Singapore’s casino/resorts mega-projects projects are expected to boost steel demand in the Southeast Asia region.

On the local front, we are optimistic that the Ninth Malaysia Plan outlining the Malaysian Government’s efforts to boost the construction industry will further improve domestic demand of steel in 2007, barring any unforeseen circumstances. We are also optimistic that the Company will benefit from the Government’s investment in the Iskandar Development Region in the State of Johor.

All the above mentioned prospects will augur well for the steel industry, which will see an increase in as well as stable demand of construction-based steel products in the next few years.

ACKNOWLEDGEMENTS

On behalf of the Board of Directors, I wish to express our sincere gratitude and appreciation for the support of our valued customers, business associates, bankers, government authorities and shareholders, and we look forward to your continued support in the future.

To all our management and staff, we thank you for your untiring efforts in helping the Company achieve its good performance for the financial year under review. My sincere thanks and appreciation also goes out to the Board members for their counsel and guidance during the past year.


SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

2007 Annual Report: Managing Director/CEO’s Statement

Tuesday, February 1st, 2011

FINANCIAL OVERVIEW

Once again, year 2007 represented another historical landmark for the Group with its steel business achieving its highest turnover of RM548 million since its inception in 1971.

The strong performance was complimented by the Group achieving its highest profit before tax of RM46 million surpassing all previous PBT records.

This strong performance for year 2007 was primarily attributed to the raise of domestic and global demand for steel coupled together with the successful implementation of various technologies by the Management to improve plant efficiency.


BUSINESS OUTLOOK

Looking forward to 2008, we expect to benefit from the beginning of the ‘Super Cycle’ for steel products worldwide.

This ‘Super Cycle’ is underscored by the surge of demand primarily from China, India, Middle East and Russia. As the economics of these regions begin to decouple from the US economy, the impact of a possible onset of a U.S. recession is expected to be well cushioned.

With the potential merger of two of the three major iron ore producers in the world that contribute up to 80% of the international supply of this basic feedstock and the scaling of historical records of crude oil prices, steel prices are expected to continue to climb in the foreseeable future. And domestically, the pace for the implementation of the RM220 billion, 9th Malaysia Plan (2006-2010) is expected to be quicken in year 2008 as the bulk of projects earmarked is expected to be constructed within the next 3 years.

The Group is confident that it is well poise to fully capitalize on these favorable business environment. Operationally, the Management of the Group is continuing its relentless efforts to ‘Cost Down’ its production costs to counter the effects of rising consumables and raw materials prices.


CORPORATE DEVELOPMENT

The company had successfully placed out to institutional investors through the issuance of 13,000,000 new share capital or 10% of paid up share capital during the financial year and the exercise was completed in January 2007. The total issued share capital is 146 million ordinary shares.


CORPORATE SOCIAL RESPONSIBILITY

Under the Corporate Social Responsibility (CSR) initiatives, the Group has set its sights to make the reduction of Green House gases from the environment as its main CSR agenda. The creation of 2 acres ‘Green Lung’ has been initiated with the planting of suitable flora species. It is the objective of the Group to increase the acreage of the ‘Green Lung’ within its 40 acres industrial complex to eventually cover 15% of its real estate within the next 3 years. In order not to deplete the valuable water resources needed to maintain these ‘Green Lung’, appropriate rain ‘Catchment Devices’ is being install to minimize the used of Jabatan Bekalan Air (JBA) water supply.

The Group’s aspiration to venture into the high growth and high margin Bio Technology section has became a reality in 2007, with the conferment by Malaysian Biotechnology Corporation Sdn Bhd to Bio Molecular Industries Sdn Bhd, a wholly owned subsidiary of Masteel, the very stringent and prestigious Bio Nexus status certification in July 2007. The construction of its RM40 million facility in Sepang has also commenced in late 2007 and market is expected to receive its first batch of high grade radiopharmaceuticals product by year 2009.


APPRECIATION

On behalf of the Board, I would like to take this opportunity to thank our invaluable shareholders, customers, bankers, suppliers and government authorities and without doubt, our achievements will not has been made possible without the driving force of our prudent management team and dedicated employees, whom have dedicated their unwavering commitments, time and energy to ensure the success of our businesses. I gratefully salute all of you!


DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

2007 Annual Report: Chairman’s Statement

Tuesday, February 1st, 2011

Dear Shareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report and Audited Financial Statements of Malaysia Steel Works (KL) Bhd for the financial year ended 31st December, 2007.

OVERVIEW

The year was endowed with particularly strong earning for the 2nd half of 2007. This was underpinned by surge of domestic demand for steel bars by vibrant construction activities and the improvement of international steel prices that have spurred the demand for our steel exports.

FINANCIAL RESULTS

2007 has been an outstanding year for Masteel, thanks to the remarkable team spirits of the Group whom have work hard to strive to gain more markets share both locally and internationally. The turnover grew by more than 51% compared to 2006’s and also achieved an outstanding profit of RM44.33 million which is 48% higher than the previous year. The other contributing factors are higher selling price and cost savings measures being undertaken during the financial year.

DIVIDEND PAYMENT

In respect of the financial year ended 31 December 2007, the Board of Directors is recommending a first and final single tier dividend of 3.0 sen per share amounting to RM4,380,000.

The proposed dividend is subject to the approval of shareholders at the Company’s forthcoming Annual General Meeting.

OUTLOOK

The prospect for the year 2008 is expected to be better than 2007. With the much publicized national election over, the ruling coalition party is expected to follow through with the implementation of the 9th Malaysia Plan which will help to sustain the forecasted 5.2% national growth rate for 2008, we expect the country will continue to enjoy moderate and sustainable growth throughout the year.

ACKNOWLEDGEMENTS

The support and confidence shown by the Group’s shareholders, valued customers, bankers, suppliers and business associates are much appreciated. It has been an eventful year and the Board acknowledges the dedication and commitment of its Management team.

In closing, I take this opportunity to thank my fellow Board members, for their professionalism and hard work that was dedicated to the Group.


SENATOR DATO’ IKHWAN SALIM BIN DATO’ HAJI SUJAK

Chairman

2008 Annual Report: Managing Director/CEO’s Statement

Tuesday, February 1st, 2011

FINANCIAL PERFORMANCE

During the financial year under review, 2008 represents significant improvement of sale and profit over the previous year. A turnover of RM881.2million was achieved with a profit before tax of RM85.7million.

This performance was attributed to the exceptional demand and high prices of steel from China and the Middle East. The previous years’ investment by the company in technological equipment, process and training for cost reduction had resulted in improved operational efficiency which was completed in time to capitalize on the exceptional market condition of 2008.

The management’s conservative stance in late July 2008 that resulted in the rapid reduction in the company’s raw material purchase for the 3rd quarter and 4th quarter had spared the company from severe stock value impairment and write downs.


BUSINESS OUTLOOK

With the onset of the global financial crisis triggered by the widespread U.S subprime housing mortgage defaults in the 2nd half of 2008, this had resulted in the substantial contraction of Gross Domestic Product (GDP) in many countries worldwide.

And as a consequence, the demand for steel is expected to be significantly reduced. A period of soft uptake and price volatility is expected to prevail for most part of 2009.

The effects of various governments’ rescue packages are expected to be felt in late 2009 onwards. The Malaysian government’s stimulus budgets of RM7.0 billion and RM60.0 billion coupled with the expenditure from the 9th Malaysia Plan is expected to help to stabilise steel prices domestically and improve the demand for steel products during the later part of 2009.


CORPORATE DEVELOPMENT

There is no placement took place during the year as the investment community took a cautious stand on various sectors and with the lower share price, the management decided to wait for the right opportunity to come by again when the stock market improves in the future.


CORPORATE SOCIAL RESPONSIBILITY

Under the Corporate Social Responsibility (CSR) initiatives, the Group continues to improve on our plant environment by planting trees to enhance our ‘green lung’ programme initiated during 2007. A sum of RM130,000 has been spent on this CSR project.


APPRECIATION

On behalf of the board, I would like to take this opportunity to thank our valuable clients, shareholders, bankers, suppliers, and relevant government authorities for their continuous supports to our group. My appreciation is also extended to the management and staffs for their hard work and contributions during the year.


DATO’ SRI TAI HEAN LENG @ TEK HEAN LENG

Managing Director/Chief Executive Officer

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