- Total THB 17,599 million revenue from sales and services, the highest recorded quarterly amount
- Steel sales volume at 811 thousand tons: HRC sales volume 647 thousand tons, slab sales 164 thousand tons for external customers or 25% of overall steel slab sales Year 2012
- Total THB 60,604 million revenue from sales and services, the highest revenue, a-26% increase from 2011
- THB 15,903 million net loss due to the delay of SSI Teesside start-up – high production cost during ramp-up –stock loss
- Premium Value Product sales volume at 803 thousand tons, a-37% increase of sales ratio
- Pulverized Coal Injection (PCI) equipment, which can reduce fuel cost by USD 30/ton, will be commissioned within Q2/2013
- Raised THB 6,184 million in new equity and THB 1,568 million from asset sale, expected to reach THB 13 billion
- Higher economy of scale – lower cost – healthier margin: key business drivers of SSI in 2013
- Steel market back to normal, price up trend, domestic demand growth to 17.5 million ton
Sahaviriya Steel Industries Public Company Limited (SSI) revealed its Q4/2012 operating result with total revenue of THB 17,599 million from sales and services, a-35% increase QoQ from THB13,008 million in Q4/2011. This is the highest revenue of its quarterly operation due to the increasing sales volume from HRC Business and Iron and Steel Making Business, with HRC sales 647 thousand tons, 2nd highest record and slab sales 164 thousand tons for external customers, with EBITDA of THB -2,078 million. There was a net loss of THB 3,259 million while in Q3/2012 the Company had a net loss of THB 4,782 million, EBITDA of THB -1,985 million and THB 2,376 million in Q4/2011.
In 2011, the Company and its subsidiaries achieved total revenue of THB 60,604 million, highest record, which was 26% up QoQ from THB 47,975 million and a net loss of THB 15,903 million while there was a net loss of THB 981 million in 2011.
The causes of 2012 loss were the delay of SSI Teesside Plant start-up, high production cost, as the production was not yet at the optimal level, the decrease of steel price in global market affected the stock loss and the setting up of additional provision on loss from diminution in value of inventories and on loss under onerous contract. However, because stable supply of its own raw material, SSI could overcome these challenges, increase its market share and add 26% of sales volume from 2011.
HRC Business gained total revenue of THB 48,470 million from sales and services, a-29% increase QoQ and a net loss of THB 1,655 million. The Premium Value Products sales ratio was 37%. Iron and Steel Making Business had a net loss of THB 14,194 million due to the still low production volume. Deep Sea Port Business recorded THB 155 million net profit. Cold Rolled Coil Business had a net profit of THB 192 million.
Mr. Win Viriyaprapaikit, Group CEO and President of SSI, stated that “2012 was a very difficult year for the global steel industry, mainly due to global economic problems. Mining and steel companies worldwide suffered en masse. It was unfortunate timing for our SSI Teesside Plant start-up. We suffered big losses from pre-operation expenses, low production during ramp-up and declining steel price. In spite of this, our HRC sales was very strong, particularly in the second half of the year, and we increased our market share; production performance at both our Teesside Plant and Bangsaphan Plant improved steadily; the synergy from vertical integration begun to bear fruit.”
“In addition, we had strong support from our stakeholders and partners. To date, we have so far raised THB 6,184 million in new equity and THB 1,568 million from asset sales. We will continue to carry out the Comprehensive Financial Plan to raise additional capital and shore up our financial strength,” Mr. Win said.
“The market now has completely turned around from a 6-month trough since the end of the year. The external environment is good – domestic demand is strong and steel industry margin is healthier this year. Internally, we have 3 major positive drivers going forward: 1) higher economy of scale from yet higher utilization of our two plants, 2) lower slab cost from the PCI project, to be commissioned in Q2/2013, and 3) higher margin as our products portfolio moves toward higher Premium Value Products ratio,” Mr. Win added.
The Company expects global steel demand in 2013 to rise, as the global economy recovers. According to the World Steel Association (WSA), in 2013 the global steel demand will expand 3.2% or 1,455 million tons and China will still be the main steel consumer. As for ASEAN, the steel consumption is expected to grow 3.3% to 56.5 million tons. Iron and Steel Institute of Thailand, (ISIT) estimated that the domestic steel demand in 2013 will be approximately 17.5 million tons, a-7.2% increase. The demand of flat steel for automobile industry will rise because of remaining undelivered cars from first car policy. Moreover, the demand for construction steel is expected to increase, as real estate and construction industry will expand due to the government’s policy to boost the economy and investments.