Steel industry will bounce back from slow business

GEORGE TOWN: Steel manufacturers, who have been facing tough times in recent years, are expecting businesses to pick-up within the next two to three years.

Tatt Giap Group Bhd chairman Datuk Thomas Liang said the deferment of mega projects in the country, such as the Kuala Lumpur-Singapore High-Speed Rail (HSR) project and East Coast Rail Link (ECRL) project had impacted the industry.

Apart from domestic factors, challenging climate of the steel industry internationally also impacted the commodity as well.

“For example, an anti-dumping policy was introduced last year in America – this affects many large companies. So, imagine us, a smaller industry player in the business.

“The deferment of the mega projects here, of course, affected us. This segment use a lot of steel for the respective projects. However, I foresee that the industry can make a comeback, this is just a temporary setback.

“For development, use of steel for any infrastructures and properties will still be there. So, the future is promising,” he said when met before the group’s annual general meeting here today.

Recently, the group had secured a new shareholder, Dynaciate Engineering Sdn Bhd, after the latter acquired 12.95 per cent stake, or 22.1 million shares.

Liang said the new partner was from the steel manufacturing business and the company had been recently awarded with a sub-contract business worth RM67 million.

In recent years, he admitted that there was lack of business activity participated by the group, hence the announcement of a new shareholder for the company could boost its business.

“We are a very small player in the industry. With them coming into the picture along with five contracts worth RM67 million, this can significantly grow our business,” he added.

According to the financial period ending 31 August 2018, the company reported revenue of RM5.01 million and loss before tax (LBT) of RM3.01 million, a RM16.91 million or 77.1 per cent drop from RM21.92 million same period last year.

Due to the slower business, the group is undergoing rationalisation of its assets.

The group’s managing director Lee Poay Keong said the company would focus on other areas to improve the revenue of the company.

At the moment, their attention will be shifted to projects in Johor Bharu, Melaka and Pahang.

“This will be our main source of revenue.

“With the rationalisation of assets, money will come in and we will look into property development,” he said.

Source: NST