Navigating Choppy Waters: A Deep Dive into MYCRON STEEL BERHAD’s Q3 FY2025 Performance
Greetings, fellow investors! Today, we’re unboxing the latest financial report from MYCRON STEEL BERHAD for its third financial quarter ended 31 March 2025. This report offers a candid look into the company’s performance, revealing a period marked by significant headwinds and strategic adjustments. While the numbers show a challenging quarter, it’s crucial to understand the underlying factors and the company’s forward-looking strategies. Let’s delve into the details and see what this steel giant has been up against.
Core Data Highlights: A Mixed Bag of Results
MYCRON STEEL BERHAD’s third quarter saw a notable dip in performance compared to the previous year, reflecting a tough operating environment. Here’s a snapshot of the key figures:
Quarterly Performance (Q3 FY2025 vs. Q3 FY2024)
For the individual quarter, the company experienced a significant contraction:
Q3 FY2025
Revenue: RM151.6 million
Operating Profit: RM2.0 million
Profit Before Tax: RM0.7 million
Profit After Tax: RM0.7 million
Basic Earnings Per Share: 0.21 sen
Q3 FY2024
Revenue: RM226.0 million
Operating Profit: RM9.2 million
Profit Before Tax: RM7.3 million
Profit After Tax: RM7.4 million
Basic Earnings Per Share: 2.28 sen
Revenue for Q3 FY2025 plummeted by 32.9% to RM151.6 million, primarily due to lower sales volume from both the Cold Rolled (CRC) segment (down 29%) and the Steel Tube segment (down 10%). The festive periods of Chinese New Year and Ramadan contributed to fewer business days, impacting sales. Furthermore, the CRC segment was hit by a sharp drop in exports, while the Steel Tube segment faced heightened competition from Chinese pipes. Unit selling prices also declined by 11% for CRC and 9% for Steel Tube, reflecting the broader downward trend in steel prices.
Year-to-Date Performance (9 Months FY2025 vs. 9 Months FY2024)
Looking at the cumulative nine-month period, the picture is equally challenging:
9 Months FY2025
Revenue: RM554.1 million
Operating Profit: RM5.2 million
Profit Before Tax: RM0.1 million
Loss After Tax: RM(0.4) million
Basic Loss Per Share: (0.11) sen
9 Months FY2024
Revenue: RM564.0 million
Operating Profit: RM13.7 million
Profit Before Tax: RM9.1 million
Profit After Tax: RM8.8 million
Basic Earnings Per Share: 2.69 sen
Year-to-date revenue saw a modest 1.8% decrease to RM554.1 million. However, the cumulative operating profit and profit before tax saw steeper declines of 62.0% and 98.9% respectively. The group recorded a post-tax loss of RM0.4 million for the nine months, a significant shift from a profit of RM8.8 million in the comparative period last year.
Segmental Breakdown: Cold Rolled vs. Steel Tube
The report highlights the performance of the two core segments:
Cold Rolled Segment:
This segment’s gross profit (adjusted for outbound delivery costs) was down approximately 16% in the current quarter. The decline was mainly due to lower sales volume and margin squeeze, exacerbated by a sharp drop in exports.
Steel Tube Segment:
This segment’s gross profit (adjusted for outbound delivery costs) saw a more drastic reduction, nearly 64% lower. This was primarily driven by heightened competition from Chinese pipes and lower sales volumes.
Financial Health: Navigating Debt and Liquidity
Despite the challenging operational landscape, MYCRON STEEL BERHAD’s financial position remains relatively stable, with some key shifts in its balance sheet:
Key Financial Indicators:
- Net Current Assets: The group maintained a healthy net current asset position of RM210.8 million as at 31 March 2025, slightly down from RM212.8 million as at 30 June 2024.
- Cash and Bank Balances: Cash and bank balances stood at RM49.8 million, a decrease from RM69.3 million at the end of the last financial year.
- Total Borrowings: Total interest-bearing debts decreased significantly to RM95.7 million from RM173.6 million as at 30 June 2024. This reduction is a positive sign of debt management.
- Gearing Ratio: The group’s gearing ratio improved to 0.18 times from 0.33 times, well below its policy of maintaining it below 1.5 times. This indicates a strong financial leverage position.
Cash flow from operating activities saw a positive inflow of RM32.5 million for the nine months year-to-date, a significant improvement from a net cash outflow of RM99.2 million in the same period last year. This suggests better management of working capital despite the revenue decline. However, net cash flows used in financing activities increased, mainly due to higher repayment of bank borrowings.
Risks and Prospects: A Challenging Road Ahead
The report doesn’t shy away from outlining the significant challenges and uncertainties facing the group, particularly in the steel industry. The current quarter coincided with the start of the Trump-Administration’s “MAGA” policies, which have profoundly impacted global trade sentiments and dwindled export orders for the Group from that region. This, coupled with weaker domestic GDP growth and a continuous contraction in Malaysia’s manufacturing PMI, paints a grim picture for steel demand.
Local steel producers are also grappling with an ongoing deluge of price-undercutting imports, exacerbated by heightened tariff wars. The subsequent fourth financial quarter has already started with dire external events, including a major gas supply disruption in Malaysia that halted production for over 16 days, and continued tariff uncertainties from the USA.
Despite these headwinds, the company is not standing still. It is actively pursuing strategic initiatives:
- Anti-Dumping Measures: The group is hopeful that remedial and supportive measures sought from the Government by the Malaysian Iron & Steel Industry Federation (MISIF) will materialize to combat steel dumping. The ongoing judicial review proceedings against MITI’s decision to remove anti-dumping duties on CRC imports from South Korea and Vietnam underscore this commitment.
- New Market Alliances: Exploring alliances in new markets to diversify its customer base and reduce reliance on volatile regions.
- Collaboration with Stakeholders: Working with authoritative stakeholders to navigate the complex market landscape and advocate for a more favorable operating environment.
The overall outlook for the remaining financial year remains bearish, with significant headwinds expected in both domestic and foreign steel markets. However, the company’s proactive stance and strategic initiatives are aimed at improving its odds as it moves into the next financial year.
Summary and
MYCRON STEEL BERHAD’s Q3 FY2025 report clearly illustrates the challenging environment faced by the steel industry. The sharp decline in revenue and profitability for the quarter, largely driven by lower sales volume, intense competition from imports, and external trade policies, is a stark reminder of the global economic uncertainties. While the year-to-date performance shows a narrower loss, it underscores the persistent operational pressures.
On a positive note, the significant reduction in total borrowings and the improved gearing ratio demonstrate sound financial management and a healthy balance sheet, providing a buffer against market volatility. The positive cash flow from operations is also a good sign, indicating the company’s ability to generate cash from its core business, even in a downturn.
The company’s strategic focus on combating dumping, exploring new markets, and collaborating with industry bodies is commendable. These efforts are crucial for long-term sustainability in a highly competitive and tariff-sensitive sector. However, the external environment, particularly global trade tensions and domestic demand weakness, will continue to dictate the pace of recovery.
Key risk points to monitor moving forward include:
- The impact of ongoing US trade policies and tariffs on export orders and market sentiment.
- The effectiveness of anti-dumping measures against imported steel products, especially from China.
- Fluctuations in steel prices and raw material costs, which directly affect margins.
- The resolution of the gas supply disruption and its long-term implications on production.
- The overall domestic economic growth and manufacturing sector performance in Malaysia.
Concluding Thoughts and Your Take
MYCRON STEEL BERHAD is undoubtedly in a tough spot, battling a confluence of global trade uncertainties, intense competition, and domestic market softness. However, the company’s efforts to manage its finances, reduce debt, and proactively address market challenges are noteworthy. The path ahead remains challenging, but their strategic initiatives could pave the way for a stronger position in the future.
What are your thoughts on MYCRON STEEL BERHAD’s latest performance? Do you believe their strategic initiatives will be enough to navigate these turbulent waters? Share your insights in the comments below!
