China Steel Corp profits fell 18.42 percent last year

STEP UP:China Steel stock has dropped 0.91 percent so far this year, a much better performance than the decline of 4.27 percent for the benchmark TAIEX

By Kevin Chen  /  STAFF REPORTER

Fri, Mar 26, 2010 - Page 11

China Steel Corp (中鋼), the nation’s largest integrated steel maker, said yesterday its profits fell 18.42 percent last year from 2008, recovering from a fall of 53.1 percent the previous year as the economy emerged from recession.

After-tax profit was NT$19.603 billion (US$614.9 million) last year, or earnings per share of NT$1.54, the Kaohsiung-based company said in a statement. After-tax profits in 2008 were NT$24.03 billion, or NT$2.03 each share, the company’s previous financial reports showed.

Revenue for the whole of last year declined 35.48 percent to NT$165.41 billion from NT$256.36 billion the previous year, the statement indicated.

By subtracting its first three-quarter profit of NT$3.92 billion from the whole-year figure, China Steel posted a profit of NT$15.69 billion in the final quarter of last year. This compares with a fourth-quarter loss of NT$15.45 billion a year earlier. Revenue for the quarter was NT$50.07 billion, down 9.21 percent from a year ago.

In the current quarter, the company raised domestic prices on all its steel products for March delivery by an average NT$1,011 per tonne (4.92 percent), after it cut them by an average NT$280 per tonne (1.33 percent) for January and February shipments.

China Steel said its board proposed to pay NT$1.07 in cash per preferred share and 3.3 percent in stock (or 33 shares per 1,000 held) based on last year’s earnings. For holders of common shares, the company will pay NT$1.01 as a cash dividend and a 3.3 percent stock dividend.

In the previous year, the company paid shareholders a cash dividend of NT$1.30 per share and a stock dividend of 4.3 percent (or 43 shares per 1,000 held).

The company’s board yesterday also approved a proposal to subscribe to 2 billion new common shares issued by its wholly owned subsidiary Dragon Steel Corp (中龍) through a private placement.

The planned investment, totaling NT$20 billion, will help Dragon Steel raise fresh funds for the construction of a second furnace.

Dragon Steel started production with it first furnace on Feb. 26 in Taichung, with an annual 2.5 million tonne capacity. The company is scheduled to build a second furnace and start production in 2013, China Steel said earlier.

China Steel’s board, however, yesterday decided to adjust downward a renovation investment in one of the company’s hot-rolled production lines to NT$2.57 billion, from the original budget of NT$9.83 billion, to reflect changes in the current market situation and the company’s financial situation.

The renovation project, which was started in January of this year, is scheduled to be finished in June 2014, the company said in the statement.

The proposed dividend payout and other business plans outlined in yesterday’s board meeting must first be approved by shareholders at a meeting slated to held on June 23.

Shares of China Steel fell 0.15 percent to NT$32.7 yesterday on the Taiwan Stock Exchange. The stock has dropped 0.91 percent so far this year, compared with a decline of 4.27 percent for the benchmark TAIEX.