Financial Highlights

By Farah Adilla

Masteel managing director and chief executive officer Datuk Sri Tai Hean Leng remained upbeat on the company’s prospects, particularly as the stronger demand for steel from the accelerated pace of economic activities globally was expected to overshadow the impact of uptrending raw material prices. 

KUALA LUMPUR: Malaysia Steel Works (KL) Bhd (Masteel) saw a firm turnaround in the financial year ended December 31, 2021 (FY21), with a net profit of RM32.5 million from a net loss of RM14.73 million in FY20.

The integrated steel manufacturer said this was buoyed by the recovery in selling prices of steel products in local and international markets. 

Masteel said prices of iron ore, a primary raw material for blast furnace-based steel making which is a bellwether for steel demand, rose from a low of US$85 per tonne in November 2021 to more than US$150 per tonne on February 11, 2022, before settling at US$143 per tonne in the fourth week of February.

At the same time, price of metallurgical coal, which constitutes 40 per cent of blast furnace cost of production, remained high year to date.

Masteel’s revenue during the period increased 14.2 per cent to RM1.58 billion from RM1.38 billion.

Masteel said the growth in revenue was bolstered by the Malaysian market where sales rose 15.8 per cent to RM1.4 billion from RM1.3 billion previously on stronger demand from the construction sector. 

Export sales remained stable at RM136.1 million in FY21, versus RM137.3 million a year ago. 

Masteel managing director and chief executive officer Datuk Sri Tai Hean Leng remained upbeat on the company’s prospects, particularly as the stronger demand for steel from the accelerated pace of economic activities globally was expected to overshadow the impact of uptrending raw material prices. 

He said the ongoing conflict in Eastern Europe was not expected to have any impact on the company’s earnings.

“This strong turnaround, is made even more significant against the backdrop of the disruptive Movement Control Orders in FY21, and showcases our resilience. 

“We are also reaping the benefits of the timely upgrading of our steel making facilities. 

“Although prices of raw materials are increasing, the greater force of external demand is widely expected to eclipse the high-cost environment,” he said.

Tai added that North Asia’s commencement of the civil construction period in the spring, together with the lifting of restrictions of steel mill activities in China, was prompting a strong rebound in domestic and international steel prices. 

“With our large capacity and reliable delivery network, we are confident of capturing this demand wave,” he said.

For the fourth quarter, Masteel’s net profit improved 46.6 per cent to RM12.04 million from RM8.21 million, while revenue increased 24.4 per cent to RM463.87 million from RM372.76 million.

Tai said the company intended to maximise its new steel making facilities, which has substantial capacity to meet the anticipated uplift in industry demand. 

“Overall, despite short-term volatilities such as the Omicron wave and labour shortage, Masteel is expected to continue delivering satisfactory performance in FY22,” he added.