Mycron moving further upmarket

MYCRON Steel Bhd is anticipating revenue to grow at least 10 per cent in its current fiscal year on firm demand and higher prices for its products.The cold rolled steel producer said growth will also come from the increased capacity at its Shah Alam plant by April this year.The RM120 million plant upgrading work, about 90 per cent complete, will increase Mycron's annual production capacity by 45 per cent to 260,000 tonnes from 180,000.Mycron reported a revenue of RM482.3 million for its financial year ended June 30 2007. Net profit was RM21.8 million, with production of cold rolled coils (CRCs) totalling 140,000 tonnes.
Chief executive officer and director Azlan Abdullah said the company was cautiously optimistic about its profit outlook in the current year with the new capacity coming online and having pre-sold all of its future production capacity."We have found a ready market to take up the additional 80,000 tonnes of capacity via our contracts with BlueScope Steel (Malaysia) Sdn Bhd and Sarawak-based PMP Galvanizers Sdn Bhd," Azlan told Business Times in an interview.In August last year, Mycron closed a deal with BlueScope Steel to supply up to 60,000 tonnes of CRCs a year. By its third year, the deal is expected to bring the company annual revenue of some RM100 million."We have also signed an off-take agreement with PMP Galvanizers to buy up to 75,000 tonnes of CRCs per year in the third year after the completion of our plant upgrade and expansion."Azlan estimates net profit growth of RM16.6 million a year from the plant upgrade and expansion, and for this to be reflected in the financial year ending June 30 2009 onwards.Meanwhile, the company has begun planning the second phase of its expansion, which will see capacity increasing to 520,000 tonnes a year."The next expansion will be divided into two sub-phases. The first sub-phase will increase Mycron's capacity to 440,000 tonnes per year within 18 months of the start date of construction, while the second sub-phase, which will see an additional 80,000 tonnes coming on line, will be completed 15 months later," said Azlan."We have requested quotes for the second phase of expansion and hope to complete it before 2010."Malaysia imports 62 per cent of its CRC needs and sources the rest locally."Of the 38 per cent of CRCs produced locally, Mycron supplies 28 per cent," said Azlan.There are four CRC producers in the country, the others being Ornasteel Holdings Bhd, Megasteel Sdn Bhd and Sarawak-based Yung Kong Galvanizing Industries Bhd.Azlan said that to improve margins, Mycron will move further upmarket this year towards producing higher quality cold rolled products used to make car bodies and roofing material."We aim to stay ahead of the competition by specialising in high-end quality CRCs," he added."We also see prospects of growth in the production of galvanised steel for roofs. Previously, about one per cent of our revenue was sold to the galvanising sector, but this figure has grown to nine per cent from the second quarter of last year," he said.Azlan said Mycron has minimal exposure to the construction sector. About 35-40 per cent of its cold rolled products is sold to steel service centres serving the electrical and automotive sectors, 20 per cent is used to make oil drums and 25 per cent is sold to furniture suppliers to make furniture fittings."We also plan to export more of our cold rolled products this year and will participate in international fairs and trade missions organised by the Malaysian External Trade Development Corp and the Ministry of International Trade and Industry."We started exporting to Vietnam and Pakistan last year albeit in small quantities," he added.Mycron has Melewar Industrial Group Bhd as its biggest shareholder, with a 54.5 per cent stake. Its other shareholders include Malaysian Assurance Alliance Bhd, Permodalan Nasional Bhd, the Employees Provident Fund Board and Lembaga Tabung Haji.-www.btimes.com.my