Leon Fuat nearly triples earnings in Q4 on compensation for land and higher revenue

PETALING JAYA: Steelworks company Leon Fuat Bhd saw its net profit nearly triple to RM27.78 million for the fourth quarter ended Dec 31, 2017, from RM9.93 million in the previous corresponding quarter on the back of higher revenue and prepayments of compensation.
Leon Fuat told the stock exchange, during the current quarter it had received compensation for the sum of RM19.52 million in relation to the compulsory acquisition of the two affected plots of land which houses the steel processing plant, office and warehouse of Supreme Steelmakers Sdn Bhd.
Revenue for the quarter increased 8.9% to RM145.67 million, compared with RM133.78 million in the same period in 2016, due to higher revenue for its processing of flat steel products.
“Our main business segments continued to be trading and processing of steel products, which collectively contributed approximately 99.8% of our total revenue for the current quarter,” it added.
For the full-year, its net profit surged 190.6% to RM80.42 million, against RM27.7 million a year ago, while revenue rose 15.8% to RM577.3 million, from RM498.7 million previously.
Leon Fuat said the revenue for its processing of flat steel products increased by 19% or RM11.27 million mainly due to higher average selling price by 15.8%.
This year, the group said it will embark on a downstream production of steel pipes which is expected to commence operation in the second half of the year.
“However, being at its infancy stage, this new venture is not envisaged to contribute to the earnings of the group for 2018 as various trials are required to be performed,” it said.
Nevertheless, the board said it believes that the group, geared with the one-stop solution and enhanced services, will continue to appeal to existing customers as well as entice potential customers, and should be able to generate positive results for financial year 2018.
The stock was trading 4.5 sen lower at 92.5 sen earlier, with some 1.5 million shares changing hands.