Southern Steel Berhad Reports Strong Q2 2026 Results, Announces Strategic Moves
Key Financial Highlights for Q2 2026
- Revenue: RM486.6 million for the quarter ended 31 March 2026. Revenue for the financial year-to-date (FYTD) is RM1.03 billion.
- Profit Before Tax (PBT): RM20.6 million for Q2 2026, with cumulative PBT at RM40.0 million for FYTD.
- Net Profit: RM17.8 million for the quarter, amounting to RM33.2 million for FYTD.
- Basic and Diluted Earnings Per Share (EPS): 1.17 sen for the quarter, 2.18 sen for FYTD.
- Improved Margins: Performance was driven by enhanced production efficiency and lower input costs, resulting in better margins despite a challenging market environment.
Financial Position and Liquidity
- Total Assets: RM1.45 billion as at 31 March 2026, up from RM1.41 billion at the end of the preceding financial year.
- Equity Attributable to Owners: RM924.1 million, up from RM884.9 million previously. Non-controlling interests increased sharply to RM50.7 million, reflecting recent equity transactions.
- Cash and Cash Equivalents: RM143.0 million, a significant increase from RM76.5 million at 30 September 2025.
- Net Assets Per Share: RM0.62 (up from RM0.59).
- Borrowings: All borrowings are unsecured, amounting to RM264.6 million (short-term).
Cash Flow Highlights
- Operating Cash Flow: RM42.4 million generated from operations for FYTD.
- Investing Activities: Net cash inflow of RM9.7 million, with notable proceeds from the dilution of subsidiary interest (RM26.1 million).
- Financing Activities: Net cash inflow of RM14.4 million, boosted by issuance of shares to non-controlling interests (RM21.4 million).
Major Corporate Developments
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Disposal of Subsidiary Interest:
- On 21 November 2025, Southern Steel Berhad entered into a Share Sale Agreement to dispose of a 45% equity interest in its wholly-owned subsidiary, Southern PC Steel Sdn. Bhd. (SPC), for RM26.1 million cash. The disposal was completed on 5 December 2025.
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Proposed Acquisition of Ann Joo Steel Berhad:
- On 27 March 2026, the Group executed a Heads of Agreement with Ann Joo Resources Berhad to acquire 100% equity interest in Ann Joo Steel Berhad (AJSB) for a base consideration of RM1.005 billion. The acquisition covers AJSB’s operational subsidiary Ann Joo Integrated Steel Sdn Bhd, and excludes two dormant subsidiaries and certain properties.
- This acquisition is highly strategic, positioning Southern Steel Berhad to further strengthen its presence in the upstream steel manufacturing sector.
Operational Review and Prospects
- The Group’s profitability was supported by higher sales volume and cost optimisation efforts.
- Despite a revenue decline in Q2 (down 11% from the previous quarter to RM487 million), profit before tax improved from RM19 million to RM21 million, attributed to lower operating expenses and strict cost management.
- Challenges remain in the steel industry, including overcapacity, volatile pricing, and rising input and logistics costs (exacerbated by Middle East tensions and local regulatory changes).
- Southern Steel Berhad is addressing these challenges through disciplined cost management, productivity improvements, and a focus on operational execution.
- The Board remains cautiously optimistic, expecting continued cost pressures and competition, but believes a strengthened balance sheet and ongoing strategic initiatives will support sustained performance ahead.
Other Noteworthy Items
- Tax Dispute: A wholly-owned subsidiary is in dispute with the Minister of Finance regarding a RM15.5 million additional tax and penalty. The Board, based on legal advice, believes the Company is entitled to the tax exemption.
- No Dividend Declared: The Board has not declared any interim dividend for Q2 2026.
- Derivatives: The Group continues to use forward foreign exchange contracts for risk management, with a total contract amount of RM154.4 million and a positive fair value of RM3.0 million as at 31 March 2026.
- Change in Financial Year End: The Group changed its financial year end from 30 June to 30 September, resulting in the absence of comparative figures for the previous year’s corresponding quarters.
Potential Share Price Movers & Shareholder Considerations
- The proposed acquisition of Ann Joo Steel Berhad is a significant, potentially transformative transaction for Southern Steel Berhad. If completed, this could substantially increase the Group’s scale and market presence, and is likely to be a key focus for investors and could be price sensitive.
- The Group’s improved profitability, strengthened cash position, and enhanced balance sheet resilience are positive signals for shareholders.
- The ongoing tax dispute, while viewed as manageable, could pose a one-off risk if the outcome is unfavorable.
- No dividend for the quarter may be viewed as a sign of prudence amid ongoing strategic investments and industry uncertainty.
Disclaimer
This article is for informational purposes only and does not constitute investment advice. Investors should conduct their own research and consult their financial advisors before making investment decisions. The information is based on the unaudited quarterly results and public disclosures of Southern Steel Berhad as at 31 March 2026.
Laporan Bahasa Malaysia
Southern Steel Berhad Catat Prestasi Kukuh Suku Kedua 2026 & Umum Langkah Strategik
Sorotan Kewangan Utama Suku Kedua 2026
- Hasil: RM486.6 juta bagi suku berakhir 31 Mac 2026. Hasil tahun kewangan setakat ini (FYTD) ialah RM1.03 bilion.
- Keuntungan Sebelum Cukai (PBT): RM20.6 juta bagi suku kedua 2026, dengan PBT terkumpul sebanyak RM40.0 juta untuk FYTD.
- Keuntungan Bersih: RM17.8 juta untuk suku ini, menjadikan jumlah setakat tahun kewangan kepada RM33.2 juta.
- Keuntungan Asas & Terencat Per Saham (EPS): 1.17 sen untuk suku ini, 2.18 sen untuk FYTD.
- Peningkatan Margin: Peningkatan kecekapan pengeluaran dan kos input yang lebih rendah telah menyumbang kepada margin yang lebih baik walaupun pasaran mencabar.
Kedudukan Kewangan dan Kecairan
- Jumlah Aset: RM1.45 bilion setakat 31 Mac 2026, meningkat dari RM1.41 bilion pada akhir tahun kewangan sebelumnya.
- Ekuiti Pemilik: RM924.1 juta, meningkat dari RM884.9 juta. Kepentingan bukan kawalan naik mendadak kepada RM50.7 juta, mencerminkan transaksi ekuiti terkini.
- Tunai dan Setara Tunai: RM143.0 juta, peningkatan ketara dari RM76.5 juta pada 30 September 2025.
- Aset Bersih Per Saham: RM0.62 (menaik dari RM0.59).
- Peminjaman: Semua pinjaman adalah tidak bercagar, berjumlah RM264.6 juta (jangka pendek).
Sorotan Aliran Tunai
- Aliran Tunai Operasi: RM42.4 juta dijana dari operasi untuk FYTD.
- Aktiviti Pelaburan: Aliran tunai bersih RM9.7 juta, dipacu hasil pencairan kepentingan dalam subsidiari (RM26.1 juta).
- Aktiviti Pembiayaan: Aliran tunai bersih RM14.4 juta, dipacu oleh terbitan saham kepada kepentingan bukan kawalan (RM21.4 juta).
Perkembangan Korporat Utama
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Pelupusan Kepentingan Subsidiari:
- Pada 21 November 2025, Southern Steel Berhad menandatangani Perjanjian Jualan Saham untuk melupuskan 45% kepentingan ekuiti dalam Southern PC Steel Sdn. Bhd. (SPC) dengan nilai tunai RM26.1 juta. Pelupusan selesai pada 5 Disember 2025.
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Cadangan Pengambilalihan Ann Joo Steel Berhad:
- Pada 27 Mac 2026, Kumpulan menandatangani Heads of Agreement dengan Ann Joo Resources Berhad untuk mengambil alih 100% ekuiti Ann Joo Steel Berhad (AJSB) dengan nilai asas RM1.005 bilion, melibatkan anak syarikat operasi AJSB, Ann Joo Integrated Steel Sdn Bhd, dan pengecualian dua syarikat dorman dan harta tertentu.
- Pengambilalihan ini adalah strategik dan akan memperkukuh kedudukan Southern Steel Berhad dalam sektor pembuatan keluli huluan.
Tinjauan dan Prospek Operasi
- Keuntungan disokong oleh volum jualan lebih tinggi dan pengoptimuman kos.
- Walaupun hasil menurun 11% berbanding suku sebelumnya, keuntungan sebelum cukai meningkat dari RM19 juta ke RM21 juta, hasil pengurusan kos yang ketat.
- Industri keluli terus berdepan cabaran struktur seperti lebihan kapasiti, harga tidak menentu dan kenaikan kos input/logistik.
- Southern Steel Berhad menumpukan pengurusan kos, peningkatan produktiviti dan pelaksanaan operasi yang rapi.
- Lembaga Pengarah kekal berhati-hati optimis dengan kekuatan kunci kira-kira dan inisiatif strategik yang berterusan.
Perkara Penting untuk Pemegang Saham
- Cadangan pengambilalihan Ann Joo Steel Berhad adalah berpotensi tinggi mengubah Southern Steel Berhad dan boleh mempengaruhi harga saham.
- Peningkatan keuntungan, kedudukan tunai yang kukuh dan kekuatan kunci kira-kira adalah petanda positif untuk pemegang saham.
- Pertikaian cukai bernilai RM15.5 juta perlu dipantau kerana berpotensi menjadi risiko sekali sahaja sekiranya tidak berpihak kepada syarikat.
- Tiada pengumuman dividen untuk suku ini, mencerminkan langkah berhati-hati berikutan pelaburan strategik dan ketidaktentuan industri.
Penafian
Artikel ini adalah untuk tujuan maklumat sahaja dan bukan nasihat pelaburan. Pelabur dinasihatkan untuk membuat kajian sendiri dan mendapatkan nasihat kewangan sebelum membuat sebarang keputusan pelaburan. Maklumat berdasarkan laporan kewangan suku tahunan tidak diaudit Southern Steel Berhad setakat 31 Mac 2026.
