Chung Hung Steel Corp. (2014-TW), a subsidiary of China Steel Corp. (2002-TW), reported a new monthly high in revenue in April on the back of an increase in shipment volume and price. The company is optimistic that its income will continue to grow in May. With the rise in the market price, the overall gross margin and profitability in the second quarter will be able to break away from the bottom performance in the first quarter, the company added.
Chung Hung Steel’s April revenue hit a record high of NT$5.895 billion, up 20.9% month-over-month and 46.9% year-over-year. Cumulative income for the first four months of April was NT$18.305 billion, an annual increase of 23.3%, the second highest in the company’s history.
Chung Hung Steel said that in addition to the downstream demand for inventory replenishment, it also saw new demand emerge. The volume of shipments in April surged to 220,000 tons, a monthly increase of 10%, and the rise in order prices also pushed revenue to a record high.
Chung Hung Steel believes that orders will remain strong, and shipments are expected to remain above 200,000 tons this month. With continued improvement in product prices, company revenue is expected to match last month’s high.
However, raw material prices remained high despite the revenue growth, which also interfered with Chung Hung Steel’s gross margin and profitability performance.
Gross profit margin dropped to 5% in the first quarter, and net income after tax decreased by nearly 70% to only NT$0.35 per share.
In this regard, Chung Hung Steel said that with the upward market price in April and May, the gross margin is expected to rebound in the second quarter, and profitability will also improve.