Bangkok--16 May--Sahaviriya Steel Industries
- Total Bt. 15,742 million revenue, the highest record in company history
- HRC Sales volume returns to normal, net loss 2,841 million due to expenses related to the non-operating assets at Iron and Steel Making Business
- 26 million tons cumulative HRC production, the first among all steel companies in Thailand
- SSI Teesside successfully produced the first slab on 18 April, boosting the Company’s sale volume from June onwards
- Target 2.2 million tons steel slab output and 2.2 million tons HRC sales in 2012
- PCI project target completion by Q1/2013
- Steel consumption trend improving, downstream industry mostly returned to full capacity
Sahaviriya Steel Industries Public Company Limited (SSI) announced its Q1/2012 operating result with total Bt.15,742 million revenue from sales and services, which is the company’s highest record. 21% up QoQ and 31% YoY, from Bt 13,008 million and Bt 12,016 million respectively. It had a net loss of Bt. 2,841 million, comparing to a net loss of Bt. 2,376 million in Q4/2011 and a net profit of Bt. 5,525 million in Q1/2011.
HRC Business had Bt. 7 million net profit, comparing to net loss Bt. 325 million in Q4/2011 and net profit Bt. 542 million QoQ. Revenue from sales was Bt.11,584 million, up 51% from Q4/2011 and down 3%YoY. Premium Value Products sales ratio was 42% of sales. On 19 March, the Company achieved 26 million tons of accumulated HRC production, the first among Thai company.
Iron and Steel Making Business had Bt. 2,849 million net loss, mostly related to Bt. 1,907 million expenses of non-operating assets at SSI Teesside Plant. It had a total revenue Bt. 4,085 million, mainly from coke business — including coke sales 275 thousand tons, by-products sales and tolling production. The plant was successfully commissioned in April — the blast furnace was relit on 15 April and first slab produced on 18 April 2012.
Deep Sea Port Business recorded net profit Bt. 27 million. Revenue was Bt. 28 million from services, 20% down QoQ due to a drop in cargo through-put. Cargo through-put is expected to increase in the later half from steel industry recovery as well as business expansion of SSI Group, particularly from SSI UK slab shipment to SSI Bangsaphan Plant.
Engineering and Maintenance Service Business recorded Bt. 5 million profit. Engineering service and project revenue from domestic and export customers was Bt. 45 million, 29% up QoQ, due to expansion of advanced engineering services.
In addition, the Company realized share of profits from joint-venture Thai Cold Rolled Steel Sheet Business at Bt.19 million.
Mr. Win Viriyaprapaikit, Group CEO and President of SSI, revealed that, “as expected, the company achieved total revenues of Bt. 15,742 million, the highest record ever, and a net loss of Bt. 2,841 million, mainly due to the non-operating expenses of SSI Teesside Plant.
For HRC Business, we achieved HRC sales volume of 497 thousand tons, 64% increase from the previous quarter and back to normal even though downstream steel demand had not fully recovered from last quarter’s flood. HRC Spread was expectedly lower than normal at USD 91 per ton, due to most of the raw material used was purchased at higher price since Q3/2011 before the flood. The revised HRC sales volume target for 2012 will be 2.2 million tons.
For Iron and Steel Making Business, as the plant was still being commissioned and there was no steel production in Q1/2012, the Company had to bear the non-operating expenses of Bt. 1,907 million. Consequently, though our revenue from coke business was Bt. 4,085 million, there was a net loss of 2,849 million. As for the good news, the plant has successfully started steel slab production in mid-April. Therefore, the non-operating expenses problem will be resolved and moreover these slabs will come in to support SSI sales from June afterwards. Two-third of steel slabs will be supplied to SSI Bangsaphan Plant and the remaining quantity will be exported to various customers who have recently shown strong interest.
The PPC Shore Crane Project was also successfully commissioned and performance-tested on 18 April 2012. We are confident that this project will enhance our discharging and loading capability of steel slabs and other cargoes, and according to plan will reduce transportation cost by USD 7.5/ton from the utilization of large Panamax vessels.
Mr. Win added that “The 6 month delay in start-up was a result of our decision to invest to reline the blast furnace, which will extend the blast furnace life to approximately 20 years, rather than the original case of shutting down in 6 years’ time for 6 months period. We believe this is the right decision and will pay us back well in the long-run. From the recent successful start-up, we have adjusted our slab production target in 2012 to 2.2 million tons and gradually increase to 3.6 million per year in 2013. In addition, Pulverized Coal Injection (“PCI”) equipment, which can reduce fuel cost by USD 38/ton, will be commissioned within Q1/2013.”
The global economy has recovery trend in the first half of 2012 and is expected to be more stable in the second half of 2012. The World Steel Association has estimated that global steel demand will increase 4.5% or 1,486 million tons in 2013. Despite the seasonal effect of Songkran holidays in April, Q2 domestic steel demand will be strong. Demand is expected to continue to rise until the end of the year and grow by 7-8% this year, due to the recovery of the downstream industry from the flood impact, particularly the automobile industry.