Union Steel Holdings Limited: FY2025 Results & Analysis

Union Steel Holdings Limited has released its unaudited condensed financial statements for the six months and full year ended 30 June 2025. The report provides valuable insight into the Group’s financial health, performance trends, and the outlook across its core segments: Metals, Engineering, and Scaffolding. Below is a detailed financial analysis, including key metrics, performance tables, dividend developments, and important company events.

Key Financial Metrics

• FY2025 Revenue: S\$106.1 million (down 7.7% YoY)
• FY2025 Net Profit: S\$9.54 million (down 25.0% YoY)
• 2H2025 Revenue: S\$47.5 million (down 22.6% YoY)
• 2H2025 Net Profit: S\$3.46 million (down 39.2% YoY)
• Basic EPS (FY2025): 8.08 cents (down from 10.78 cents in FY2024)
• Net Asset Value per Share: 81.64 cents (up from 74.85 cents)
• Final Dividend Proposed: 0.85 cent per share (down from 1.30 cents in FY2024)

Quarterly and Annual Financial Comparison

Historical Performance Trends

• Revenue: After peaking at S\$114.9 million in FY2024, revenue fell 7.7% in FY2025. The drop was most pronounced in the Engineering segment (-14.4% YoY), with the Metals segment growing modestly (+3.8%) and Scaffolding declining by 19.2%.
• Profitability: Net profit margin also compressed, with FY2025 net profit falling to S\$9.54 million (from S\$12.73 million), reflecting a combination of lower sales and increased administrative expenses.
• Gross Profit Margin: Dipped from 27.2% in FY2024 to 25.6% in FY2025, mainly due to less favorable segment mix and market competition.
• Dividend Trend: The proposed final dividend per share was cut to 0.85 cent, compared to 1.30 cents in the prior year, reflecting reduced profitability and possibly a more cautious cash management stance.

Exceptional Items, Asset Revaluations & Corporate Actions

• Asset Revaluation: A previously owner-occupied leasehold property was reclassified as investment property, resulting in a S\$974,000 fair value gain. However, another property saw a fair value loss of S\$803,000, partly offsetting the gain.
• Investment in Associated Company: The Group acquired a significant stake in Eneco Energy Limited (listed on SGX), investing S\$10.9 million in shares and warrants. Some shares and warrants were later sold or exercised, with the Group holding 951 million shares (28.85% equity interest) as at the announcement date.
• Major Capital Expenditure: S\$25.3 million was invested in property, plant and equipment in FY2025, including a new office building and replacement of rental materials.
• Bank Borrowings: Increased substantially (from S\$26.97 million to S\$44.69 million) to fund acquisitions and capex, raising net gearing from 11.2% to 25.5%.
• Dividend Policy: Dividend per share was cut by 34.6% YoY, in line with reduced profits.

Directors’ and Key Management Remuneration

• Total directors’ and key management compensation: S\$3.62 million in FY2025 (down from S\$3.89 million in FY2024), comprising short-term and post-employment benefits.

Significant Events & Outlook

• Subsequent Events: Further divestments and warrant exercises in Eneco Energy Limited post-FY2025 increased the Group’s stake to 28.85%.
• Property Acquisition: Option exercised to purchase a leasehold industrial property at 1 Benoi Road for S\$7.5 million, pending JTC approval for lease extension.
• Macroeconomic Environment: Management warns of persistent market challenges in steel and scrap metals, heightened competition in Scaffolding, and execution delays in Engineering projects due to market phasing changes and geopolitical uncertainties.
• No share buybacks, placements, or mandates were announced.

Chairman’s Statement & Management Tone

“The market for new steel and scrap metal remains challenging, with ongoing price softening and heightened competition. However, management remains cautiously optimistic about the steel leasing and logistics services within this segment despite pressures from a challenging market.

While the Scaffolding segment continues to be a key contributor to the Group, it has recently encountered heightened market competition. Nevertheless, the segment remains supported by a stable base of recurring customers, and management is actively pursuing opportunities to expand its project portfolio.

The [Engineering] sector continues to be supported by strong energy demand, investment activity, and progress in sustainable initiatives. However, project execution has been slower than expected due to phasing changes, and extended lead times. Investor sentiment has also been cautious amid geopolitical uncertainties and evolving tax regimes. Management remains measured optimism for the near-term outlook, supported by a stable order book and sustained investment interest in our target markets.”

The statement reflects a cautious and measured tone, acknowledging sector-specific headwinds but expressing confidence in the Group’s ability to navigate them.

Conclusion & Investor Recommendations

Overall Assessment: Union Steel Holdings delivered a weaker set of results for FY2025, with revenue, profit, and dividend all declining. The Metals segment was resilient, but Engineering and Scaffolding underperformed amid increased competition and market softness. The Group’s balance sheet remains healthy, but higher borrowings and a more conservative dividend signal a prudent approach in an uncertain environment. Management’s outlook is cautious, underlining continued vigilance and selective optimism.

Investor Recommendations

• If you are currently holding the stock:
  Consider holding if your investment horizon is long-term and you can tolerate short-term volatility. The company remains profitable, maintains a solid net asset value, and continues to invest for future growth. However, be mindful of the lower dividend and weaker earnings momentum. Monitor for improvement in the Engineering segment and progress in the new investments (e.g., Eneco Energy, property acquisition).
• If you are not currently holding the stock:
  Exercise caution before initiating a new position. Wait for signs of recovery in revenue and profit, especially in the Engineering and Scaffolding segments. A more attractive entry point may emerge if the market further discounts the current headwinds. Consider the stock only if you have a risk appetite for cyclical industrials and are seeking exposure to a diversified Singapore-based industrial player with potential upside from new investments.

Disclaimer: This analysis is based solely on information contained in the company’s published financial report. It does not constitute investment advice. Investors should perform their own due diligence and consult a licensed financial adviser before making investment decisions.

View UnionSteel Historical chart here