Fangda Special Steel Technology (600507) Q2 2024 earnings summary

Executive summary

• Revenue for H1 2024 was ¥12.75 billion, down 4.75% year-over-year; net profit attributable to shareholders was ¥163 million, down 42.82% year-over-year.

• Gross margin and net margin declined due to steel price drops outpacing cost reductions.

• Steel product output and sales volume increased 9% year-over-year, but average selling prices fell.

• The company maintained profitability despite industry-wide margin compression and weak downstream demand.

Financial highlights

• Operating income: ¥12.75 billion, down 4.75% year-over-year.

• Net profit attributable to shareholders: ¥163 million, down 42.82% year-over-year.

• Net profit excluding non-recurring items: ¥222 million, down 18.91% year-over-year.

• Operating cash flow: ¥2.18 billion, up 36.77% year-over-year.

• Basic EPS: ¥0.0699, down 46.76% year-over-year.

Outlook and guidance

• H2 2024 expected to see moderate recovery in steel demand as infrastructure and manufacturing investment remain strong, though real estate remains weak.

• Industry supply-demand balance may improve as production cuts are anticipated due to low profitability.