China Steel reports gain of 3.2 percent last quarter

China Steel Corp (中鋼), Taiwan's largest maker of the alloy, had a 3.2 percent gain in fourth-quarter profits as increased demand enabled the company to raise prices and more than offset higher costs.

Net rose to NT$12.9 billion (US$420 million) from NT$12.5 billion a year earlier. The figures were derived by Bloomberg by subtracting nine-month earnings from full-year numbers that the Kaohsiung-based company announced yesterday.

China Steel boosted prices for local customers four times last year on rising demand from builders and manufacturers. The nation's GDP expanded 5.7 percent last year, the fastest rate in three years, boosting consumption of the alloy.

"Demand in the steel market has been quite good," said Allison Lu (呂雅菁), an analyst at Capital Securities Corp (群益證券) in Taipei, who has a "buy" rating on the stock. "The company has been able to pass on increased costs."

The cost of importing coking coal for steelmakers surged 28 percent last year, according to the Bureau of Energy. The Baltic Dry Index, a benchmark for the price of shipping bulk commodities such as iron ore and coal, more than doubled.

Fourth-quarter at China Steel rose 12 percent to NT$55.7 billion, according to monthly stock exchange filings. Company spokesman Chung Le-min (鍾樂民) declined to comment on the derived profit figure.

The steelmaker increased prices by an average 0.48 percent in the fourth quarter compared with the previous three months, after a total gain of 6.2 percent in the nine months to September.

China Steel climbed 1.6 percent to NT$45 by the close of Taipei trading and before the full-year earnings announcement. The stock has gained 3.5 percent this year, compared with the 3.8 decline in the benchmark TAIEX.

Profit last year climbed 31 percent to NT$51.3 billion, the steelmaker said yesterday. Full-year sales surged 17 percent to NT$207.9 billion, according to a previous stock exchange filing.

China Steel plans to pay a cash dividend of NT$3.5 per share on earnings for last year, together with a so-called stock dividend of three new shares for each 100 shares held by investors, the company said. That compares with a cash dividend of NT$2.78 per share and a stock dividend of three new shares the previous year.

The company's board yesterday approved the spending of NT$22.4 billion to upgrade plants and expand storage capacity, according to other filings to the stock exchange.