Hiap Teck net earnings jump nine-fold to RM71.09mil in Q1

KUALA LUMPUR: Hiap Teck Venture Bhd’s net profit jumped more than nine-fold year-on-year (YoY) to RM71.09 million in the first quarter (Q1) ended October 31, 2021, from RM6.97 million recorded previously.

In an exchange filing today, the steel company said this was mainly attributable to the continued strength of steel prices and increased volume from the company’s downstream activities and higher contribution from the joint-venture entity.

Its Q1 revenue jumped 75.7 per cent YoY to RM406.63 million from RM231.44 million on the back of higher sales volume and steel prices and a significant contribution from trading and manufacturing segments.

The World Steel Association projected that steel demand will grow by 4.5 per cent in 2021 to reach 1.86 billion tonnes and will further increase by 2.2 per cent in 2022 to 1.90 billion tonnes.

China, the world’s biggest steel user, will see a 1.0 per cent contraction in 2021, while Asean-five, after contracting 10.1 per cent in 2020, is predicted to grow 6.6 per cent in 2021 and a further 5.4 per cent in 2022.

Hian Teck said the current forecast is based on the assumption that the spread of the Covid-19 virus will be less damaging and disruptive than seen in the previous waves.

It said the construction sector is likely to grow by 11.5 per cent in 2022 on account of better performance in all its sub-sectors following the continuation and acceleration of major infrastructure projects, such as Light Rail Transit Line 3 (LRT3), Mass Rail Transit Line 3 (MRT3), Johore-Singapore Rapid Transit System (RTS) as well as Pan Borneo Highway in Sabah and Sarawak.

The Residential buildings sub-sector is expected to expand further in line with the government measures to address the shortage of affordable housing.

Although steel prices was currently

adjusting on a downward bias, the company would be vigilant of the trend of steel prices and continue to focus on prudent procurement strategies and inventory management.

This is to mitigate any potential adverse impact on the company’s performance and financial strength.

Management remains positive on the performance in the coming quarter as the resumption of economic activity gathers momentum and business confidence is boosted.

At the JV entity, Hiap Teck will achieve further cost savings by completing its second 100,000-tonne coke oven plant in October 2021 and the next 200,000 tonnes to complete by the financial year ending July 31, 2022 (FY22), and which will directly contribute to the company’s performance.

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