Tue, Jan 22, 2013 - Page 13 News List

China Steel Corp points to low prices as pre-tax profits plummet 69 percent

By Camaron Kao  /  Staff reporter

China Steel Corp (CSC, 中鋼), the nation’s only integrated steelmaker, yesterday said low steel prices had pushed its pre-tax profit down 69.78 percent to NT$6.13 billion (US$211.6 million) last year from a year ago.

The Greater Kaohsiung-based company said in a statement that revenue was NT$207.19 billion last year, down 13.8 percent from a year earlier.

“The company suffered greatly from low steel prices for the year, which dragged down both revenue and profit,” vice president Steve Lee (李慶超) said by telephone.

China Steel said in its statement that its pre-tax profit was NT$2.14 billion in the fourth quarter last year, up 3.93 percent from NT$2.06 billion in the third quarter, due to cheaper raw material prices.

However, the fourth-quarter figure was 62.96 percent less than the NT$5.78 billion it reported for the same period of 2011.

Production volume was 8.38 million tonnes last year, down 4.27 percent from 8.77 million tonnes in 2011, while sales volume was 8.79 million tonnes, down 4.07 percent from 9.17 million tonnes in 2011, the company said.

Grand Cathay Investment Services Corp (大華投顧) analyst Tsai Yen-ling (蔡燕鈴) yesterday said she estimates the company’s after-tax profit last year could be NT$5.57 billion, including income of NT$111 million obtained from selling the firm’s shares in Taiwan Semiconductor Manufacturing Co (台積電) in the second half of last year.

The company’s earnings per share are estimated at NT$0.36 per share for last year, Tsai said in a note.

Lee said he expected the firm’s sales volume to rise 10 percent in the first quarter this year from last quarter because of improving economic sentiment.

On Friday, the company announced it intends to raise its March contract prices by 3.08 percent per tonne on average, on the back of rising customer demand.

While China Steel is expecting steel prices to rise steadily this quarter, the company will start using higher-priced iron ore from March, which will push its costs higher.

Meanwhile, lower shipments resulting from the long Lunar New Year holidays are also likely to drive sales down in the first quarter, Tsai said.

China Steel shares were down 2.32 percent at NT$27.35 yesterday in Taipei trading. Over the past 12 months, the company’s shares have fallen 5.53 percent, while the TAIEX has gained 6.79 percent.

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