Fri, Oct 24, 2008 - Page 11 News List

China Steel Q3 profits drop 18.5%

By Kevin Chen  /  STAFF REPORTER

The rising cost of raw materials and slowing demand have caused China Steel Corp (中鋼), the nation’s largest and only integrated steelmaker, to post an 18.5 percent decline in profit quarter-on-quarter during the third quarter.

Pre-tax profit totaled NT$15.35 billion (US$461 million) from July to last month, the Kaohsiung-based company said in a stock exchange filing yesterday.

That compared with NT$18.84 billion posted in the second quarter and NT$14.83 billion a year earlier, the company’s data showed. The total was lower than SinoPac Securities Corp (永豐金證券) analysts’ forecast of NT$22 billion.

Shares of China Steel fell 3.38 percent to close at NT$22.9 yesterday before the release of its quarterly figures. The stock has plunged 47.36 percent since the beginning of the year, compared with a decline of 44.39 percent on the benchmark TAIEX, the stock exchange’s tallies showed.

China Steel’s revenue in the third quarter totaled NT$76.89 billion, up 14.81 percent from its second-quarter level, the same filing showed. Year on year, the increase would be 48 percent, according to the company’s data.

Production output and sales volume, meanwhile, dipped 1.96 percent and 2.26 percent to 2,523 tonnes and 2,535 tonnes respectively in the third quarter from the previous quarter, indicating weakened market demand amid a slowing economy at home.

China Steel’s third quarter performance came after the company adjusted upward its quarterly steel prices for domestic clients by 17.8 percent in the third quarter to reflect rising raw material costs and shipping fees.

Despite the price hikes, the company’s 18.5 percent drop in profit in the third quarter was mainly because of a one-off investment loss related to the Taiwan High Speed Rail Corp (THSRC, 台灣高鐵), the online news outlet cnyes.com reported yesterday, citing China Steel executive vice president and spokesman Chung Lo-min (鍾樂民).

Chung told the news outlet that China Steel would write off roughly NT$4 billion in its investment in the loss-making THSRC, the operator of the nation’s first high-speed rail system, in a way to show responsibility to its shareholders.

During the first three quarters of the year, the company saw its pre-tax profit grow NT$1.84 billion, or 3.95 percent, to NT$48.52 billion from a year earlier, with earnings per share at NT$4.04. Revenue expanded NT$48.96 billion, or 32.16 percent, to NT$201.2 billion over the same period, the filing showed.

China Steel is expected to announce next month its new domestic steel prices for the first quarter of next year, after the company raised prices by an average of 3.92 percent for the fourth quarter in August.

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