China Steel Corp (CSC, 中鋼) said yesterday its net profit last year dropped 48.1 percent from the year before on the back of falling steel prices and rising raw material costs, leading the company to propose its lowest dividend payout since 2001.
The nation’s largest and only integrated steel maker said in a statement that its board had approved a plan to distribute a cash dividend of NT$1.25 per preferred share and a stock dividend of 1.5 percent based on last year’s earnings.
For holders of common shares, the company proposed paying NT$1.01 in cash and 1.5 in stock.
In the previous year, China Steel paid both preferred and common shareholders a cash dividend of NT$1.99 per share and a stock dividend of 5 percent.
The Greater Kaohsiung-based company reported a rise in revenue to NT$240.38 billion last year, compared with NT$239.19 billion the previous year.
However, its net income last year fell to NT$19.5 billion (US$659.1 million), or earnings per share of NT$1.36, compared with a net income in 2010 of NT$37.59 billion, or earnings per share of NT$2.83.
Earnings last year shrank after the company incurred a fourth-quarter loss of NT$573 million, its first quarterly loss in more than two years, which the firm attributed to falling prices, investment losses and inventory writedown amid weak global demand and a lackluster world economy.
With the company’s stock price closing at NT$30.05 yesterday on the Taiwan Stock Exchange, the proposed cash dividend of NT$1.01 for holders of common shares translates into a dividend yield of 3.36 percent, still higher than the interest rates on fixed-term deposits offered by local banks.
China Steel’s board also approved a plan to increase capitalization at its subsidiary in Australia to allow the foreign unit to proceed with raw materials investment and energy resources exploration.
The company said in a stock exchange filing that its board proposed increasing the paid-in capital of CSC Steel Australia Holdings Pty Ltd by NT$91.5 billion, which would help enhance the Taiwanese company’s self-sufficiency in raw materials and thus lower its procurement cost.
The move came after the company announced on Feb. 21 it planned to pay Australian miner MCG Group A$102 million (US$107.3 million) for a 10 percent stake in MDL162, a coal mine in Queensland’s Bowen Basin, which will provide China Steel with up to 600,000 tonnes of metallurgical coal a year.
The proposed dividend payout and other business plans outlined in yesterday’s board meeting still have to be approved by shareholders at the company’s annual general meeting on June 15.
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