KUALA LUMPUR: Lion Corp Bhd’s net loss ballooned to RM97.35 million or 5.12 sen a share for 1QFY12 ended Sept 30, from the loss of RM56.38 million registered in the corresponding period last year.
The widening loss was despite revenue gaining by about 29% to RM675.63 million during the quarter from RM525.16 million recorded in the same period last year.
Lion Corp said the higher prices of raw materials and an unrealised foreign exchange loss of approximately RM20 million, due to the weakening of the ringgit against the greenback, resulted in a net loss position during the quarter.
With weak earnings, the group’s operating cash flow had also turned negative, as the group reported an operating loss before working capital of RM21.24 million for the three-month period from a profit of RM18.28 million previously.
Also worth noting is the deteriorating financial position of the group. In terms of current liquidity, the group’s current liabilities of RM3.52 billion (RM966.23 million in short-term debt obligations and RM2.55 billion in payables) as at Sept 30, far outweighed current assets of RM1.23 billion (RM791.8 million in inventories and RM391.5 million in receivables and cash). Lion Corp remains debt heavy with total debt at RM2.81 billion versus cash of RM141.2 million.
Total equity stood at only RM189.1 million as at Sept 30.
“International steel prices remained weak while the local demand was adversely impacted due to the dumping activities by foreign exporters,” Lion Corp said in an announcement to Bursa Malaysia, referring to the influx of cheap imported hot rolled coils (HRCs) that had caused its unit Megasteel Sdn Bhd to lose significant market share here.
Compared with the preceding quarter, group revenue had also sunk 34.3% to RM675.63 million from RM1.03 billion in 4QFY11 ended June 30.
Lion Corp said the operating environment for the local flat steel industry was expected to remain challenging due to persistent dumping activities by foreign exporters.
“The group will continue to work closely with the government to address the problem of excessive imports at dumping prices, and assist in the formulation of a supportive environment for the local steel industry to grow, upgrade and expand in an orderly manner,” it added.
Lion Corp holds 79% of Megasteel, the country’s sole manufacturer of HRCs, with its affiliate Lion Diversified Holdings Bhd holding another 21% stake.
Megasteel had recently petitioned to the government to impose an additional 35% duty on imported HRCs, but this was rejected due to negative feedbacks from downstream players.
Subsequently, the company had lobbied for a reduction in import duty on certain flat steel products from 25% to 15%, but with the removal of duty exemptions.
Its latest request is still being reviewed by the government.
This article appeared in The Edge Financial Daily, November 23, 2011.
The widening loss was despite revenue gaining by about 29% to RM675.63 million during the quarter from RM525.16 million recorded in the same period last year.
Lion Corp said the higher prices of raw materials and an unrealised foreign exchange loss of approximately RM20 million, due to the weakening of the ringgit against the greenback, resulted in a net loss position during the quarter.
With weak earnings, the group’s operating cash flow had also turned negative, as the group reported an operating loss before working capital of RM21.24 million for the three-month period from a profit of RM18.28 million previously.
Also worth noting is the deteriorating financial position of the group. In terms of current liquidity, the group’s current liabilities of RM3.52 billion (RM966.23 million in short-term debt obligations and RM2.55 billion in payables) as at Sept 30, far outweighed current assets of RM1.23 billion (RM791.8 million in inventories and RM391.5 million in receivables and cash). Lion Corp remains debt heavy with total debt at RM2.81 billion versus cash of RM141.2 million.
Total equity stood at only RM189.1 million as at Sept 30.
“International steel prices remained weak while the local demand was adversely impacted due to the dumping activities by foreign exporters,” Lion Corp said in an announcement to Bursa Malaysia, referring to the influx of cheap imported hot rolled coils (HRCs) that had caused its unit Megasteel Sdn Bhd to lose significant market share here.
Compared with the preceding quarter, group revenue had also sunk 34.3% to RM675.63 million from RM1.03 billion in 4QFY11 ended June 30.
Lion Corp said the operating environment for the local flat steel industry was expected to remain challenging due to persistent dumping activities by foreign exporters.
“The group will continue to work closely with the government to address the problem of excessive imports at dumping prices, and assist in the formulation of a supportive environment for the local steel industry to grow, upgrade and expand in an orderly manner,” it added.
Lion Corp holds 79% of Megasteel, the country’s sole manufacturer of HRCs, with its affiliate Lion Diversified Holdings Bhd holding another 21% stake.
Megasteel had recently petitioned to the government to impose an additional 35% duty on imported HRCs, but this was rejected due to negative feedbacks from downstream players.
Subsequently, the company had lobbied for a reduction in import duty on certain flat steel products from 25% to 15%, but with the removal of duty exemptions.
Its latest request is still being reviewed by the government.
This article appeared in The Edge Financial Daily, November 23, 2011.
