Group to increase monitoring of steel prices and currencies given volatility of commodity markets and weaker ringgit
Leon Fuat Berhad, a manufacturer and trader of steel products specialising in rolled long and flat steel, today reported a 35.8% increase in revenue to RM250.93 million for the second quarter ended 30 June 2022 (Q2FY2022) compared with RM184.78 million recorded in the corresponding quarter of the preceding financial year (Q2FY2021).
The Group recorded profit before tax (PBT) of RM18.04 million for Q2FY2022, a 57.6% decrease from RM42.57 million registered in Q2FY2021 while recording profit after tax (PAT) of RM14.02 million, which is a 56.3% decrease from RM32.12 million reported in the corresponding quarter of the preceding financial year.
For the quarter under review, the trading segment contributed 38.4% to revenue while the processing segment contributed 61.5%.
For the six months ended 30 June 2022 (1H 2022), Leon Fuat registered a 32.2% increase in revenue to RM523.95 million compared with RM396.26 million recorded in the six months ended 30 June 2021 (1H 2021). For the period under review, the Company reported PBT of RM49.85 million, a 41.4% decrease from RM85.10 million recorded in 1H 2021 while for 1H 2022, PAT decreased 44.4% to RM37.91 million compared with RM68.23 million recorded in 1H 2021.
Calvin Ooi Shang How, Executive Director of Leon Fuat said, “We saw higher overall revenue on the increased contributions from the trading and processing of steel products, but a combination of lower overall gross profit margin and inventories written down of RM13.88 million in the current quarter as certain inventories were measured at its estimated net realisable value weighed on PBT.”
“The outlook for the global economy remains volatile on a combination of China’s slowdown, the Russia-Ukraine war and tighter monetary policy in response to inflation. While the domestic economy has so far weathered the challenges on a combination of resilient exports and private consumption, uncertainties remain because of the potential risks from supply-chain disruptions and rising commodity prices leading to inflationary pressure.”
“We are more neutral as to the prospects for the remaining quarters of the year given these challenges especially with the softening of steel prices and the weaker ringgit. We have increased monitoring of steel prices and related currencies and continue to take proactive measures including negotiating forward contracts, where necessary, as well as prudent inventory management, to reduce any negative impact which may arise. The Group will strive to keep operating costs at manageable levels while enhancing operating capabilities and efficiencies to meet customer requirements and to ensure timely satisfaction of customer orders.”
Leon Fuat Berhad: [BURSA: LEFU] , https://www.leonfuat.com.my/