FINANCIAL YEAR OVERVIEW
For FY2024, the Group recorded
revenue of RM802 million, a
substantial increase from RM540
million in FY2023, alongside
a pre-tax profit of RM20.7
million, reversing the pre-tax
loss of RM13.8 million from the
previous year. This success
reflects Mycron’s commitment
to operational efficiency and
market resilience amidst the
broader industry challenges,
particularly the stagnation in
China’s demand growth.
In the first financial quarter, the Group recorded revenue of RM163 million, a modest 2.5% increase than the preceding quarter of RM159 million. This growth was primarily driven by higher sales volume in the Steel Tube division, despite facing lower selling prices in both the Steel Tube and CRC divisions. The Group posted a pre-tax profit of RM2.1 million, a significant improvement from the preceding quarter’s pre-tax loss of RM0.4 million, which had been impacted by an impairment charge of RM6.8 million.
The second financial quarter
saw a revenue increase of 7.4%
to RM175 million, largely driven
by higher sales volumes despite
continued pressure on prices.
The Group posted a pre-tax loss
of RM0.29 million due to tighter
margin spreads in the CRC
division as it defended market
share against persistent ‘grey
and duty-evading’ imports, and
sought new export opportunities.
By the third financial quarter,
revenue had risen to RM226
million, driven by increased
sales volumes for both the
CRC and Steel Tube divisions,
despite lower average selling
prices in a declining market. The
Group recorded a pre-tax profit
of RM7.3 million, largely boosted
by export growth in the CRC
division.
The fourth financial quarter
closed with a 5.3% increase
in revenue to RM238 million
and pre-tax profit surged by
58.9% to RM11.6 million. This
growth was primarily driven
by sustained export volumes
in the CRC division, reflecting
Mycron’s strategic expansion
of its presence in international
markets.
ECONOMIC LANDSCAPE
In 2023, the combined effects of monetary tightening and
declining global steel demand exerted downward pressure
on steel prices from April through November, significantly
compressing steel margins and profitability. Although steel
prices staged a robust demand between November 2023
and early February 2024, they once again fell as demand
remained weak, largely due to persistently high interest rates
impacting the construction and machinery sectors, alongside
China’s economic slowdown.
China’s demand dynamics have had a profound impact
on both the global and domestic steel markets. Following
challenging conditions in 2022, the unexpected early
reopening in 2023 spurred a temporary surge in economic
growth. However, this momentum quickly faded, with
growth stalling from the second quarter of 2023 through the
remainder of the year and into the first half of 2024. While net
exports provided some support to the Chinese economy in
2024, the overall investment climate remained fragile, driven
largely by the continuing downturn in the real estate sector,
which is now in its third year of contraction.
This sustained weakness in China’s property sector has
significantly dampened domestic steel demand. Throughout
the first half of 2024, despite government interventions aimed
at stabilising the property sector, Chinese steel demand
remained lacklustre. Falling housing prices have eroded
consumer confidence, leading to stagnant sales and a dearth
of new property launches. As a result, China’s steel demand
continued to be subdued. By August 2024, the situation
had become untenable, with Chinese steel producers
facing excess capacity, which has fuelled aggressive export
behaviour. This surge in exports has pushed global and
Malaysian steel prices below marginal cost levels.
In response to the ongoing demand slump, the Chinese
government had introduced additional stimulus measures,
including fiscal spending initiatives, interest rate cuts, and
reduced reserve requirement ratios, alongside policies
aimed at boosting property demand. While these actions
have not yet yielded the desired stability, we remain hopeful
they will gradually revive steel demand in China. Should the
Chinese government implement further capacity reductions
in line with declining demand, the global steel industry could
see significant improvement. However, if overproduction
persists, we may witness continued increases in Chinese
steel exports, which would perpetuate the downward
pressure on global prices.
Looking ahead, we remain cautiously optimistic for a recovery
in 2025. With inventory levels currently low, we anticipate a
restocking phase in the coming months, which could boost
apparent steel demand. Barring any unforeseen events, we
are hopeful that steel demand in Malaysia and globally will
begin to rebound, though we remain vigilant and prepared
for continued market volatility.
DOMESTIC CRC INDUSTRY STRUCTURE
Hot Rolled Coil (“HRC”) steel sheets are the fundamental
raw material used in producing Cold Rolled Coils (“CRC”)
steel sheets. In general, CRC manufacturers produce two
types of CRC:
As one of the few fully operational Malaysian-owned and managed flat steel mills, Mycron is proud to contribute to the nation’s industrial development. Mycron continues to engage with the government to advocate for measures that protect and ensure the sustainability of the domestic steel industry.
OVERALL MOVEMENT OF FLAT STEEL IN MALAYSIA
Overall Movement of Flat Steel in Malaysia by Calendar Year
(Source: Malaysia Iron and Steel Industry Federation, MISIF)
The table above provides a comprehensive summary of the overall movement of flat steel in Malaysia for the calendar year
2023, along with comparisons to 2022 and percentage changes. In 2023, Malaysia consumed a total of 1.06 million tonnes of
CRC sheets and strips, marking a 3.91% increase from 2022. Of this consumption, 0.65 million tonnes (approximately 61%)
were imported, while only 0.44 million tonnes (about 39%) were produced domestically.
Despite domestic production capabilities, imports constitute a substantial portion of consumption and remain a primary
source to meet domestic demand. This reliance underscores the importance of supporting local steel mills and enhancing
policies to reduce dependency on imports and strengthen the domestic steel industry.
To ensure a level playing field for domestic CRC producers, Mycron continues to lead efforts to address dumped and
subsidised steel imports that harm the domestic market. We persist in engaging with relevant government ministries,
agencies, and industry associations to mitigate the impact of unfair imports and emphasise the importance of protecting the
domestic steel industry.
OUR COMMITMENT TO
Governance
The Board of Directors recognises that corporate governance
principles are the foundation upon which stakeholder
confidence is built. We acknowledge the importance of
conducting business with integrity and in accordance with
widely accepted corporate governance standards. Our board
members and senior executives are committed to upholding
the highest standards of corporate governance and business
ethics across all operations of the Group. Our governance
model includes, among other elements, the Board Charter,
Terms of Reference for Board Committees, Anti-Fraud/Anti
Corruption Policy, Fit and Proper Policy, Communication
Policy, Conflict of Interest Policy, and Corporate Disclosure
Policies and Procedures.
Sustainability
Operating sustainably is integral to our business
strategy. We strive to incorporate sustainable practices
across governance, environmental stewardship, social
responsibility, and economic performance. Our sustainability
agenda is championed by our Group Chief Executive Officer,
with strong support from senior executives, and we are
committed to achieving our sustainability objectives and
targets as outlined in our Sustainability Report, adhering to
global reporting standards.
In alignment with our sustainability commitment and the
Malaysian Government’s key initiatives, namely the National
Energy Transition Roadmap (NETR), New Industrial Master
Plan (NIMP 2030), and Circular Economy (CE) Policy
Framework, we acknowledge the crucial role the domestic
steel industry plays in achieving the nation’s sustainability
objectives.
National Energy Transition Roadmap (NETR)
The NETR outlines measures to achieve net-zero
emissions by 2050, an initiative we fully support. As
an integral part of the domestic steel industry, we are
dedicated to aligning our operations with the country’s
commitment to environmental sustainability, ensuring
that we contribute meaningfully to Malaysia’s long-term
energy and environmental goals.
New Industrial Master Plan (NIMP 2030)
The NIMP 2030 is designed to equip the steel industry
for a sustainable future by promoting decarbonisation
through energy-efficient practices, renewable energy
adoption, and cutting-edge technologies. Mycron is
fully aligned with this agenda, committed to adopting
these technologies and practices to reduce our carbon
footprint. We aim to lead by example, embracing
innovations that not only enhance our competitiveness
but also drive the transformation towards a greener,
more sustainable industrial landscape in Malaysia.
Circular Economy (CE) Policy Framework
Aligned with both the NETR and NIMP2030, the CE Policy
Framework aims to transition Malaysia’s manufacturing
sector to a circular economy by 2030. Mycron is fully
committed to supporting this framework by integrating
circularity into our production processes. We are
continually exploring ways to minimise waste, increase
recycling efforts, and improve resource efficiency across
our operations.
PROSPECTS AND OUTLOOK
Looking ahead, the next year is expected to bring increasing challenges to the steel industry. China’s aggressive export
strategy, driven by excess steel production amidst weak domestic demand due to real estate issues and factory slowdowns,
is exacerbating global market pressures.
The ongoing effects of deglobalisation and trade protectionism will continue to weigh on the industry. Regional steel prices,
which have been on a continuous downward trend since March, reached new lows in August and are forecasted to remain
weak for the rest of the year. Domestic steel producers are likely to face ongoing intense competition and margin compression
from imports, compounded by subdued domestic demand, elevated inventory levels, and declining steel prices. Nevertheless,
our performance over the past year has demonstrated our ability to remain resilient and adapt strategically in the face of
varying market conditions.
The demand for low carbon emissions steel is anticipated to increase sharply over the next ten years, and we are positioning ourselves to lead in this evolving space. Our goal is to become Malaysia’s leading manufacturer of low carbon emission Cold Rolled Coil (CRC) steel sheets and steel tubes. Our ongoing collaboration with Universiti Teknologi Malaysia (UTM) to establish greenhouse gas (GHG) emission threshold standards, coupled with our partnership with JFE Steel Corporation to integrate green steel into our value chain, are vital components of this strategy. Though still in their early stages, these initiatives are intended to place us at the forefront of the steel industry’s transition towards sustainability, ensuring long-term competitiveness and positioning us as leaders in the low carbon emissions steel market.
DIVIDEND
In view of the Group’s financial position and the need to invest in future growth opportunities, the Board of Directors does not
recommend the payment of any dividend for the financial year ended 30 June 2024.
ACKNOWLEDGMENT AND APPRECIATION
On behalf of the Board, I would like to express my sincere appreciation to our management team and staff for their unwavering
dedication and contributions to Mycron. To our valued business associates, customers, and shareholders, thank you for
your continued support, confidence, and trust in us. Together, we will navigate the challenges ahead and strive towards a
sustainable and prosperous future.
Tunku Dato' Yaacob Khyra
Executive Chairman