Sahaviriya Steel Industries Plc. reports its Q1/2013 operating result

Sahaviriya Steel Industries Plc. reports its Q1/2013 operating result

  • Group revenue – HRC production – HRC shipment reach highest quarterly records
  • Total Baht 19,949 million revenue from sales and services
  • Steel sales volume at 944 thousand tons: HRC sales volume 707 thousand tons, Slab sales 237 thousand tons for external customers
  • Net profit of Baht 868 million for SSI and consolidated net loss of Baht 778 million
  • Turned the corner with positive Group EBITDA of Baht 800 million
  • PCI Technology commissioning in end Q2/2013 will reduce energy cost and increase productivity in Iron and Steel Making Business

Standalone Financial Statements

Sahaviriya Steel Industries Public Company Limited (SSI) revealed its Q1/2013 operating result with total revenue of Baht 15,626 million from sales and services, the highest quarterly record, up by a-12% QoQ and a-35% YoY. EBITDA was Baht 1,576 million, up 329% QoQ and 177% YoY. Net profit was Baht 868 million; up from net loss Baht 422 million and net profit Baht 7 million in Q4/2012 and Q1/2012 respectively.

Consolidated Financial Statements

The Company and its subsidiaries realized total revenues of Baht 19,949 million from sales and services, a-13% increase QoQ and a-27% increase YoY. This is the highest revenue of its quarterly operation with steel sales volume at 944 thousand tons: HRC sales volume 707 thousand tons, Slab sales 237 thousand tons for external customers or 35% of overall Slab sales. The Company and its subsidiaries recorded cost of sale and service of Baht 20,394 million, EBITDA of Baht 800 million, net loss of Baht 778 million, and EPS of negative 0.03 Baht/share, while in Q4/2012 the Company had negative EBITDA of Baht 2,078 million, a net loss of Baht 3,259 million, and EPS of negative 0.14 Baht/share.

In Q1/2013, the Company also achieved HRC production record at 770 thousand tons or a net production of 764 thousand tons and HRC shipment record at 707 thousand tons, due to strong domestic demand and stability of raw material supply from the synergy of vertical integration.

Compared to Q4/2012, the Company and its subsidiaries achieved better operating results due to higher HRC sale volume, combined with higher HRC Rolling and Slab Margin. However, the Company still endured consolidated net loss caused by under optimal production level at Iron and Steel Making Business.

  • HRC Business generated total revenue of Baht 15,626 million from sales and services, the highest revenue of its quarterly operation, with 35% Premium Value Products sales ratio, and had a net profit of Baht 868 million; up from net loss Baht 422 million in Q4/2012.
  • Iron and Steel Making Business generated sale and service revenues of Baht 10,819 million from slab sales of 670 thousand tons, 237 thousand tons or 35% of which were sold to external parties, and had a net loss of Baht 1,775 million.
  • Deep Sea Port Business generated revenue from services Baht 115 million with a net profit of Baht 46 million.
  • Engineering and Maintenance Service Business generated total revenue of Baht 224 million from sales and services, 60% from external customer, and recorded Baht 17 million net profit.
  • Cold Rolled Coil Business generated revenue from sales of Baht 3,254 million with a net profit of Baht 125 million.

Mr. Win Viriyaprapaikit, Group CEO and President of SSI, stated that “SSI has turned the corner with positive EBITDA of Baht 800 million in Q1/2013, after seven consecutive quarters of negative EBITDA. In term of quarterly achievements, we broke 3 records – highest group revenue, highest sales volume and highest production volume in our HRC Business. This remarkable result is again a further testament to the merit of our vision of vertical integration. With capacity utilisation just at 76% and 70% in Thailand and in the UK assets respectively, there is still much room for improvement and better performance to come. We are not far from reaching economy of scale and generating profits.

As for the short term outlook, in Q2/2013 we see softer market conditions due to seasonal effect in Thailand and weaker steel prices globally, albeit counterbalanced by similarly weaker raw material prices and better production performance at our Iron and Steel Making Business. The commissioning of PCI technology there will also mark an important milestone and give us lower energy cost and higher productivity going forward. As for the longer term outlook, we continue to see strong domestic demand for our products, driven by stable economic growth and ongoing urbanisation and industrialisation of the country. Interestingly, we also see the iron ore supply side now shifting to be more favorable for steelmakers, leading to better margins.”