Chia Yi Steel Co (嘉義鋼鐵), which makes steel products for the hydraulic, automobile and agricultural sectors, said yesterday that it expects that revenue will increase 20 percent this year from last year as orders from the agricultural and automobile sectors increase.
Agricultural sector sales are expected to grow to account for 30 percent to 35 percent of its revenue this year, up from 22.65 percent a year ago, while products for the automobile sector would contribute 20 percent of the total revenue, up from 16 percent the previous year.
“We started developing the agricultural sector business because we discovered during the global financial crisis in 2009 that the sector was relatively unaffected by the economic downturn,” chairman Tsao Kuang-chao (曹光照) said.
Chia Yi registered revenue of NT$1.04 billion (US$35.9 million) last year, up 10.75 percent from NT$937.75 million the previous year, with overseas sales accounting for 84 percent of overall revenue.
Sales to Japan accounted for 40 to 45 percent of total revenue, the company said.
Last year’s revenue could have been higher if not for the end of cooperation deals with China-based Chery Automobile Co (奇瑞汽車) and Great Wall Motors Co (長城汽車) amid the tightening monetary environment in China, which led the company’s sales for the auto sector to decline 31.32 percent year-on-year to NT$170.46 million last year, the company said.
Chia Yi posted profit of NT$29.22 million, or NT$1.22 per share, for last year, down 22.79 percent from NT$35.88 million, or NT$1.76 per share, the previous year.
Profit decline was due to yen depreciation, which forced Chia Yi to lower its prices, Tsao said.
With yen becoming more stable this year, alongside with foreign exchange hedge measures, Chia Yi expects profits to rise more than 20 percent this year from last year.
Last quarter, the company reported a revenue increase of 16.37 percent to NT$275.27 million, up from NT$236.56 million the previous year, according to the company’s filing with the Taiwan Stock Exchange.
Chia Yi is set to shift its listing from the Emerging Stock Market to the GRETAI Securities Market on May 26, when it is to issue 2.24 million shares at NT$22 per share.
The company will use the proceeds to build a warehouse in Taiwan, Tsao said.
The company also plans to spend NT$60 million starting in the fourth quarter this year to build a production line for steel products for the agricultural sector in China’s Hebei Province to cope with demand from its Japanese clients, Tsao said.
Kubota Corp, which makes industrial machinery, farm machinery and fluid piping systems, is among the company’s major clients in Japan.
The new production line is expected to be completed by February next year and reach full utilization rate within two years, Tsao said, adding that the new production line would be able to make 10,000 tonnes of products a year.
Chia Yi produces 39,600 tonnes of products a year at present.
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