Print

Mail

wiki links

China Steel Corp's profits decline as shipping costs rise

"China Steel may not be able to completely pass on the rise in coal and iron-ore costs."

Jennifer Liang, a Taipei-based analyst at KGI Securities Co

China Steel Corp (中鋼), the nation's largest maker of the metal, posted its first profit decline in a year in the third quarter after shipping costs climbed.

Net income fell 5.5 percent to NT$12.1 billion (US$373 million) compared with NT$12.8 billion a year earlier, according to figures derived by Bloomberg from the nine-month result announced by the Kaohsiung-based company yesterday. The steelmaker last had a profit decline in the third quarter of last year.

China Steel joins South Korea's Posco in reporting lower profit because of higher raw-material, energy and shipping costs. Quarterly profit at Posco, Asia's biggest steelmaker by market value, fell 1.2 percent, while JFE Holdings Inc, Japan's second-largest mill, said Oct. 25 that profit dropped 10 percent.

"China Steel may not be able to completely pass on the rise in coal and iron-ore costs," Jennifer Liang, a Taipei-based analyst at KGI Securities Co, said before the earnings announcement.

She has an "underperform" rating on the stock.

Third-quarter sales rose 8.9 percent from a year earlier to NT$52.1 billion, after a 21 percent gain in the previous three months, according to monthly filings to the Taiwan Stock Exchange.

Nine-month net income climbed to NT$38.3 billion, or NT$3.35 per share, from NT$26.7 billion, or NT$2.33, the company said in a statement to the stock exchange yesterday.

China Steel shares fell 0.9 percent to NT$49 by the close of trade before the earnings were announced. The stock has surged 46 percent this year, compared with the 25 percent increase in the TAIEX.

The firm increased third quarter prices for local customers by 2.4 percent from the previous three months after a 3.2 percent gain in the April to June period.
This story has been viewed 1110 times.