Perwaja & Southern Steel record losses

24-02-2009:
Perwaja slips into the red in 4Q, RM90m net profit for FY08
Fong Min Hun http://www.theedgedaily.com/cms/content.jsp?id=com.tms.cms.article.Article_a641f14d-cb73c03a-1a8402c0-a6a45244#
KUALA LUMPUR: Perwaja Holdings Bhd slipped into the red with a net loss of RM212.82 million in its fourth quarter ended Dec 31, 2008 after registering a strong set of results in the previous three quarters.
It attributed the loss to lower selling prices and sales volume and a writedown to net realisable value in inventories amounting to RM225.8 million.
Revenue plunged 77.4%, or RM756.7 million, from RM978 million in the previous quarter due to the international steel market slump and weakening global economy.
Due to the strong previous quarters, Perwaja, which was listed last August, stayed in the black for the full year with a net profit of RM90.15 million, while revenue surged 38% to a record RM2.33 billion in FY08 from RM1.69 billion in FY07.
The group made provisions totalling RM346.1 million for the impairment of inventory value in the second half of 2008. Excluding the provisions made, the group would have posted a 168% rise in full-year net profit to RM436.2 million for FY08 from RM162.6 million in FY07.
“2008 was a roller-coaster year not just for Perwaja, but for the industry as a whole,” Perwaja managing director Tan Sri Pheng Yin Huah said in a statement.
“We achieved a strong set of results in the first half of 2008, driven by a sharp spike in steel price and robust demand both from the domestic and regional markets. Unfortunately, the downswing in the second half of the year was just as sharp, and this had reduced our overall performance.”
Perwaja expressed “cautious optimism” for FY09 owing to the government’s stimulus spending and signs of improvement in the market.

Friday February 20, 2009
Southern Steel records loss
Southern Steel Bhd posted a RM300mil loss in the last quarter ended Dec 31, as the steep drop in steel prices eroded the value of its inventories.
Its revenue was RM489mil versus RM689mil registered in the same quarter a year earlier.
The huge losses in the last quarter dragged down the group’s full year (FY08) earnings to RM105mil from RM192mil previously.
“The lower profit was due to poor market conditions in the second half of the year and the dimunition in value of inventories,” Southern Steel said in a filing with Bursa Malaysia.
“The board does not expect a quick recovery and expects this new financial year to be challenging,” it added.
The company said the steel sector was probably the worst affected in terms of the drop in demand and prices, as the financial crisis dragged the world into a recession.