Mainboard-listed Hupsteel says the group posted a 39% fall in profit after tax for the quarter ended 31 December 2010 (2QFY11) to $1.9 million from $3.1 million in 2QFY10. Revenue remained flat at $44.1 million.
Lim Kim Thor, CEO of Hupsteel, says, “With rising raw materials costs translating into higher steel prices coupled with a soft market demand, gross profit margin faced a downward squeeze during the period. As a result, gross profit for 2QFY11 and 1HFY11 fell to $6.5 million and $13.0 million from $8.4 million and $14.3 million for 2QFY10 and 1HFY10 respectively. Consequently, profit after tax also fell to $1.9 million from $3.1 million reported for 2QFY10. The comparative figures in 2QFY10 and 1HFY10 were boosted by write back of $1.5 million and $2.5 million respectively of provisions for inventory write-down made earlier. I am pleased to report that 2QFY11 profit after tax was better than the $1.8 million reported for 1QFY11.”
“The recent flooding of the Australia coal mining regions is likely to affect coal supply in the short term and since coal is needed in the production of steel, steel supply may be curtailed in the coming quarters. This may lead to further price increases. With shipyards announcing more new orders in recent months, there are signs of a firming up of demand for steel products in the coming quarters,” Lim adds.