China Steel Corp (中鋼), the nation’s largest integrated steelmaker, said yesterday its profits rose 91.49 percent last year from 2009, recovering from a fall of 18.42 percent the previous year as demand increased in the wake of economic recovery.
Net income was NT$37.59 billion (US$1.27 billion) last year, or earnings per share of NT$2.83, the Kaohsiung-based company said in an e-mailed statement.
Net income in 2009 was NT$19.6 billion, or NT$1.54 per share, the company’s earlier financial reports showed.
Revenue for the whole of last year increased 44.6 percent to NT$239.19 billion from NT$165.41 billion the previous year, the statement indicated.
With NT$33.89 billion left in distributable profits for last year, the company said its board had proposed bonus plans to reward shareholders, employees and board directors.
Based on the board’s proposals, China Steel plans to pay both holders of preferred shares and common shares NT$1.99 in cash per share and 5 percent in stock (or 50 shares per 1,000 held) based on last year’s earnings.
In the previous year, the company distributed NT$1.07 in cash per preferred share and 3.3 percent in stock based on 2009 earnings. For holders of common shares, it paid NT$1.01 as a cash dividend and a 3.3 percent stock dividend.
With China Steel’s stock price closing at NT$33.2 yesterday, the proposed cash dividend of NT$1.99 translates into a dividend yield of 5.99 percent, which is higher than the interest rates of most local banks’ three-year term deposits at around 1.2 percent and represents a stock that offers a stable and high dividend yield despite the recent market correction.
Meanwhile, the company’s board also approved a plan to sell global depositary receipts backed by between 700 million and 840 million common shares, according to the statement. The proceeds will be used to strengthen the firm’s financial structure and boost its working capital, it said.
The proposed dividend payout and other business plans outlined in yesterday’s board meeting must first be approved by shareholders at the company’s annual general meeting on June 15 in Kaohsiung.
Meanwhile, China Steel is scheduled to announce its domestic prices for April and May tomorrow, after it last month raised prices on most of its steel products for next month’s delivery by an average of NT$663 per tonne, or 2.9 percent, to reflect rising raw material costs and a strengthening New Taiwan dollar.
Analysts had expected the steelmaker to continue increasing prices, with that of hot-rolled coil, a benchmark product, likely to rise by an average of between NT$2,000 and NT$3,000 per tonne to match the current domestic spot quote of NT$23,000 per tonne, Citigroup Global Markets said in a note on Monday.
“Improved demand from downstream steelmakers and rising material costs are the key drivers for the expected price hike,” Citigroup analyst Timothy Chen wrote in the note.