KUALA LUMPUR (Aug 25): Prestar Resources Bhd returned to the black with a net profit of RM19.2 million for the second quarter ended June 30, 2021 (2QFY21), thanks to higher steel prices, as its steel pipes, guardrails and racking division saw positive contribution.

The stronger earnings came as its quarterly revenue more than doubled to RM124.49 million from RM53.32 million in the corresponding quarter a year ago, when the group made a net loss of RM2.89 million, its stock exchange filing today showed.

Compared with the immediate preceding quarter of 1QFY21, the group's net profit rose 4.7% from RM18.33 million, though revenue fell from RM140.18 million, following the imposition of stricter movement restrictions or full movement control order (FMCO) that started on June 1 and affected the group's operations.

In a statement, group managing director Datuk Toh Yew Peng attributed the increase in 2QFY21 profit and revenue to better sales margins stemming from higher demand on the products and services of all business segments of the group, on top of the continued rising trend of steel prices.

“However, the robust growth was hampered when total lockdown was imposed on June 1, 2021,” he added.

For the six months ended June 30, 2021 (1H2021), the steel product and equipment maker made a net profit of RM37.55 million, almost 33 times the RM1.15 million it reported in the corresponding period a year ago, as revenue surged 80% to RM264.68 million from RM147.02 million. Besides higher selling prices of its products, the group attributed the jump in earnings to demand that gained strength, following the relaxation of movement control during end-FY20 till the early part of the current financial year.

On prospects, Toh noted that uncertainties arising from the Covid-19 pandemic had resulted in disruptions of worldwide supply, causing prices of most commodities and shipping costs to increase dramatically. “This has also put pressure on the steel price, which is expected to continue on an upward trend. Locally, the iron and steel sector is still not in full operation due to lockdown measures imposed, thus affecting the demand and supply of steel products,” he said.

Having said that, he said the group, which expects the current trend to continue for the rest of FY21, is cautiously optimistic that it will continue to generate satisfactory performance for the rest of FY21.

Prestar’s share price settled unchanged at 70.5 sen today, valuing the company at RM252.35 million.