CosmoSteel Q4 net surges 74.1% to S$2m on energy projects

Singapore

INCREMENTAL revenue from energy- related projects drove CosmoSteel Holdings' fourth-quarter net profit up 74.1 per cent to S$2 million for the three months ended Sept 30, 2014 from S$1.2 million in the same period last year.

Revenue jumped 23.4 per cent to S$41.5 million from S$33.6 million in 2013.

Largely underpinned by a project secured in Vietnam, sales from energy projects surged 38.8 per cent from S$25.3 million to S$35.1 million. But the increase was partially offset by lower turnover from the marine sector, which fell 33.7 per cent from S$7 million to S$4.6 million.

For the 12 months ended Sept 30, higher warehouse rentals, employee costs and depreciation of properties accounted for a 12.9 per cent net profit fall to S$5.5 million, while higher sales from energy-sector projects in Singapore, China and the Philippines marginally improved revenue by 1.2 per cent to S$157.6 million.

As a supplier and distributor of piping system components (comprising mainly stainless steel products) in the energy and marine industry, CosmoSteel's customers include blue-chip companies such as Shell and Alstrom.

In view of global uncertainties and a foreseeable increase in competition locally and globally going forward, the company expects market conditions to remain challenging.

"The energy and marine sectors in the region will still be revenue generators for us in FY2015," said Cosmo- Steel chief executive officer Ong Chin Sum.

"Even though competition is increasingly tough, we will continue our efforts to grow these segments by identifying new potential markets and suitable growth opportunities," he said. "Given the rising-cost environment, cost management will also be a major strategy that we will focus our efforts on."

The regional upstream energy sector, given its significant order sizes, will remain a key area that the company will focus on to drive volume sales, it said in a statement.

There are also plans to continue marketing efforts targeting end-users in Vietnam, China and the Philippines, which are markets with a healthy pipeline of energy-related projects.

The company has proposed a final cash dividend of 0.5 Singapore cent, a 50 per cent decrease from Q4 FY13's dividend of one cent.

Earnings per share stood at 0.76 cent while net asset value per share was 40.56 cents.

CosmoSteel's share price closed unchanged at S$0.37 on Wednesday.

The regional upstream energy sector, given its significant order sizes, will remain a key area that the company will focus on to drive volume sales, CosmoSteel Holdings said in a statement.