China Steel announced a pre-tax profit of NT$680 million for June, setting a record for the highest single-month profit this year. This marks a significant turnaround from the loss reported in the same period last year, with pre-tax earnings per share at NT$0.04. Cumulatively, the first half of the year saw pre-tax earnings of NT$3.49 billion, reflecting an annual growth rate of 108%, and pre-tax earnings per share of NT$0.22.
The surge in profits is attributed to increased steel sales and gross profit, along with gains from engineering contract adjustments and non-industry income such as mining investment dividends and interest. These factors collectively bolstered China Steel’s profit growth in the first half of the year.
Analysts note that despite current lows in the steel market, there are positive signs of stabilization. China’s injection of long-term funds, equivalent to NT$1.4 trillion, to replace old vehicles and appliances is expected to stabilize steel demand, providing future growth opportunities.
In June, China Steel’s carbon steel sales reached 640,000 metric tons, with cumulative sales for the year at 3.96 million metric tons. The company reported June revenue of NT$29.9 billion, reflecting a monthly decrease of 6.13% and an annual decrease of 0.86%. However, the single-month pre-tax profit rose by 1.4% monthly and a substantial 2044% annually, making it the highest pre-tax profit month this year.
Second-quarter revenue stood at NT$94.5 billion, a slight annual decrease of 0.8% but a quarterly increase of 0.87%. The pre-tax surplus for the quarter was NT$2 billion, up 10% annually and 36.6% quarterly. For the first half of the year, consolidated revenue was NT$188.3 billion, an annual increase of 1%, with an operating profit of NT$2 billion, marking a 47% annual increase. The pre-tax surplus of NT$3.49 billion reflected a 108% annual rise, largely due to non-industry income contributions.
China Steel highlighted increased production and sales in the steel sector, stronger unit gross profits, and benefits from engineering contract changes and overseas mining investment dividends. The current issued shares number 15.773 billion, excluding 150 million treasury shares, resulting in pre-tax earnings per share of NT$0.04 for June, NT$0.12 for Q2, and NT$0.22 for the first half of the year.
Fundamentally, China Steel noted global economic recovery with interest rate cuts in Europe and Canada. The U.S. Department of Commerce reported a 2.8% quarterly GDP growth for Q2, exceeding expectations. As inflation cools, the Federal Reserve is anticipated to start cutting interest rates by September, potentially boosting end-market investment and consumption.
Additionally, China Steel and TECO Electric announced a collaboration to enter the Indian electric bus market, manufacturing electric bus power systems. Sinosteel will supply high-efficiency self-adhesive coated electromagnetic steel for motors, aiding TECO’s supply chain in India with mass production expected in Q1 next year. This partnership aims to capitalize on the growing demand for electric buses in India.
