CSC posts NT$3b in May earnings

This article was published by the Taiwan Headlines on June 7, 2006. It reports that in May 2006, China Steel Corporation in Taiwan posted NT$3.071 billion (US$95.96 million) in pre-tax earnings. This figure represented a sequential increase of 23.83 percent and hit a record high for the year.

China Steel has raised prices by more than 10 percent on the products that are scheduled for delivery in the third quarter of 2006. The company is expected to have a great opportunity to see its monthly pre-tax earnings exceed NT$4 billion (US$125 million) in the second half of 2006.

Specifically, China Steel raised the domestic wholesale prices by an average of NT$1,700 (US$53.12) per metric ton on the products that are to be delivered in the third quarter of 2006. In terms of individual products, hot-rolled steel coils saw the highest price hie of NT$2,230 (US$69.6) per metric ton, followed by cold-rolled steel coils and wire rods.

In May 2006, China Steel registered NT$14.21 billion (US$444.06 million) in sales, down 18.94 percent from the figure in 2005, but up 8.5 percent from the figure in April 2006. In the first five months of 2006, the company had cumulative pre-tax earnings of NT$120.5 billion (US$3.76 billion).

According to this article, because of the upward trend in global steel prices, downstream firms have shown more willingness to place orders with upstream manufacturers. This has helped China Steel to secure a steady growth in the orders it received. Meanwhile, because of the upward adjustment of its product prices, China Steel estimates that it will see its earnings in the second quarter of 2006 rise higher than those in the previous quarter. The company's gross profit margin reached 15.02 percent in the first quarter of 2006, and this ratio is expected to jump to as high as 20 percent in the second quarter.

Based on China Steel's current monthly shipment of 800,000 metric tons, the company is expected to see its monthly pre-tax earnings increase by between NT$1 billion (US$31.25 million) and NT$1.3 billion (US$40.62 million) in the third quarter of 2006. According to China Steel, if global steel places continue to rise, then the company will also raise its product prices in the fourth quarter of 2006. In short, the company aims to reach NT$40 billion (US$1.25 billion) in pre-tax earnings in 2006.