Navigating Headwinds: A Look into Malaysia Steel Works (KL) Bhd’s Q1 2025 Performance
The Malaysian steel sector continues to face a complex landscape, balancing market dynamics with evolving regulatory and environmental demands. Today, we’re diving into the latest financial report from MALAYSIA STEEL WORKS (KL) BHD (Company No. 197101000213), a key player in the industry, for the first quarter ended 31 March 2025. While the numbers reveal a challenging period marked by a dip in revenue, the company’s strategic foresight, particularly in sustainability, offers a compelling narrative for the future.
Let’s break down the key figures and what they mean for this steel giant.
Financial Performance: A Mixed Bag
Malaysia Steel Works (KL) Bhd reported a mixed performance in Q1 2025. While revenue saw a decline compared to the same period last year, the company managed a marginal improvement in profit before tax (PBT) when compared to the immediate preceding quarter, signaling some resilience in a tough environment.
Revenue Performance
The Group’s revenue for Q1 2025 stood at RM607.61 million. This marks an 8.29% decrease when compared to RM662.51 million in the same quarter last year. The report attributes this reduction primarily to lower selling prices of steel products. Comparing it to the immediate preceding quarter (Q4 2024), revenue also saw an 11.24% dip from RM684.53 million.
Q1 2025 Revenue
RM607,606k
Q1 2024 Revenue
RM662,506k
Profit Before Tax (PBT)
Despite the revenue challenge, the company recorded a profit before tax of RM1.37 million for Q1 2025. This is a significant 75.94% decrease from the RM5.69 million PBT achieved in the corresponding quarter last year. The report highlights lower sales margin and higher operating expenses as key contributors to this year-on-year decline.
However, on a quarter-on-quarter basis, PBT actually improved marginally by 7.62% from RM1.27 million in Q4 2024. This slight improvement was primarily due to an unrealised foreign exchange gain, which means the company benefited from currency fluctuations on its financial assets or liabilities that have not yet been converted into cash.
Q1 2025 PBT
RM1,370k
Q1 2024 PBT
RM5,693k
Net Profit and Earnings Per Share (EPS)
The net profit for the period stood at RM0.378 million, down from RM3.138 million in Q1 2024. Consequently, basic and diluted earnings per share (EPS) also saw a notable drop, from 0.46 sen in Q1 2024 to 0.05 sen in Q1 2025.
Q1 2025 EPS (sen)
0.05
Q1 2024 EPS (sen)
0.46
Financial Health Check
Looking at the balance sheet, the company’s financial position remained relatively stable. Total assets were RM2,273.04 million as of 31 March 2025, largely unchanged from RM2,273.19 million at the end of 2024. Total equity also saw a slight increase to RM968.75 million from RM968.37 million, keeping the Net Assets per share steady at RM1.40.
Cash Flow from Operations
Cash flow from operating activities, a crucial indicator of a company’s ability to generate cash from its core business, decreased significantly to RM11.06 million in Q1 2025, compared to RM58.30 million in Q1 2024. This considerable reduction reflects the challenging operational environment and lower profitability during the quarter.
The company also saw a net decrease in cash and cash equivalents of RM22.87 million for the period, ending the quarter with RM39.86 million in cash and cash equivalents, down from RM57.52 million in the same period last year.
Borrowings
Total borrowings stood at RM616.71 million as of 31 March 2025, all denominated in Ringgit Malaysia and secured. Notably, long-term borrowings increased to RM79.92 million from RM21.88 million at the end of 2024, while short-term borrowings decreased to RM536.80 million from RM580.99 million.
Risks and Prospects: Navigating the Steel Sector’s Storm
The report candidly addresses the headwinds facing the steel market. These include new US import tariffs announced in April 2025, the seasonal impact of Ramadan holidays, and crucially, the curtailment of natural gas supply to the company since April 2025 due to a pipeline explosion. These factors have collectively impacted demand, production, and selling prices for steel bars and billets in the near term.
However, the company remains optimistic about a rebound in the latter half of the year, anticipating a rebalancing between demand and supply. More impressively, Malaysia Steel Works (KL) Bhd is proactively positioning itself for the future, particularly concerning environmental regulations.
Pioneering Green Steel
A significant highlight is the company’s preparation for the government’s upcoming carbon tax on the steel and energy sectors next year. The report proudly states that the company has the lowest Greenhouse Gas (GHG) emissions among local steel mills, expecting to be the least impacted by this new tax.
Further demonstrating its commitment to sustainable steel production, the company announced a collaboration in May 2025 with a subsidiary of Kelington Group Berhad, a leading industrial gas manufacturer, and University Tunku Abdul Rahman (UTAR). This partnership aims to develop carbon capture, utilisation, and storage (CCUS) technology for its residual GHG emissions, with an ambitious goal of achieving Net Zero before 2050.
Beyond environmental initiatives, the company is also focused on operational improvements. Strategies include innovating to enhance margins, identifying new customer bases, and reducing production costs through improved productivity. These well-planned strategies are expected to help the company weather current challenges and emerge stronger and more profitable.
Summary and
MALAYSIA STEEL WORKS (KL) BHD’s Q1 2025 report reflects the current volatility in the steel market, with revenue and profit under pressure from lower selling prices and higher operating costs. The significant drop in year-on-year profit before tax and cash flow from operations highlights the immediate challenges.
However, the company’s strategic focus on long-term sustainability and operational efficiency provides a compelling narrative. Its proactive stance on carbon tax readiness and the pioneering CCUS collaboration demonstrate a forward-thinking approach that could differentiate it in an increasingly environmentally conscious industry. While the short-term outlook is impacted by external factors, the company’s commitment to innovation and cost reduction suggests a resilient path forward.
Key risk points to consider for the company’s near-term performance include:
- The ongoing impact of US import tariffs on steel products.
- Potential disruptions from seasonal factors like holidays.
- The implications and duration of natural gas supply curtailment from the Putra Heights pipeline explosion.
- Fluctuations in steel selling prices and raw material costs.
From a professional standpoint, while the immediate financial figures present a challenging picture, the company’s emphasis on future-proofing through sustainability initiatives and operational efficiency is commendable. It suggests a management team that is not just reacting to market conditions but actively shaping its competitive advantage for the long run.
What are your thoughts on Malaysia Steel Works (KL) Bhd’s Q1 2025 performance? Do you believe their focus on green steel and operational improvements will be enough to navigate the current market headwinds and secure stronger profitability in the coming months?
Share your views in the comment section below!
