SHAH ALAM – LEON FUAT BERHAD (“Leon Fuat” or the “Group”), a manufacturer and trader of steel products specialising in rolled long and flat steel, today announced the Group’s financial performance for the third quarter ended 30 September 2024 (“Q3FY2024”) with a stable revenue of RM230.44 million, reflecting a cautious approach amidst fluctuating market conditions and rising operational costs.
For Q3FY2024, Leon Fuat recorded a revenue of RM230.44 million, a slight decline of 2.5% compared to RM236.36 million for the corresponding quarter of the previous financial year (“Q3FY2023”). The Group’s main business segments, trading and processing of steel products collectively contributed approximately 99.8% of the total revenue, with trading and processing segments contributing 34.4% and 65.4%, respectively.
The Group’s gross profit decreased slightly by 0.7% or RM0.12 million, from RM18.12 million for Q3FY2023 to RM18.00 million for Q3FY2024. The decline was primarily due to a RM2.70 million write-down of inventories to their net realisable value in the quarter, which was absent in Q3FY2023. Without this, the Group achieved a higher overall gross profit margin of 9.0%, an increase of 1.3 percentage points compared to 7.7% for Q3FY2023.
Despite the challenging market environment, the Group maintained profitability with a profit before tax (“PBT”) of RM0.84 million for Q3FY2024, compared to RM3.99 million for Q3FY2023. The decline in PBT was mainly due to the write-down of inventories and lower other income, which decreased by RM0.34 million primarily due to reduced realised and unrealised foreign exchange gains and lower gains on disposal of plant and equipment, which was partially mitigated by increase of interest income and higher insurance claims.
In comparison with the immediate preceding quarter (“Q2FY2024”), Leon Fuat’s revenue for Q3FY2024 increased marginally by 1.5% from RM227.00 million to RM230.44 million. However, gross profit decreased by 14.6% from RM21.07 million to RM18.00 million, and PBT dropped from RM4.74 million to RM0.84 million. The decline in profitability was primarily due to a RM2.70 million write-down of inventories, lower realised foreign exchange gains, and increased operating costs in the quarter.
Calvin Ooi Shang How, Executive Director of Leon Fuat commented, “The third quarter presented ongoing challenges for the steel industry, with fluctuating prices and rising operational costs putting pressure on our profitability. Despite this, we remain focused on enhancing efficiencies and maintaining prudent cost management to navigate these hurdles. Our stable revenue in the trading and processing segments highlights our resilience and ability to meet diverse customer demands.”
He added, “Looking forward, we are hopeful about the final quarter of FY2024. While external challenges such as steel price volatility and currency fluctuations persist, we will continue to leverage our operational strengths and strategic initiatives to maintain profitability and create long-term value for our stakeholders.”
As at 27 November 2024, the share price of Leon Fuat is RM0.475, representing a market capitalisation of RM162 million.
