08-06-2025
- Business
- New Straits Times
Leon Fuat braces for regional steel glut, sharpens edge on pricing and speed
KUALA LUMPUR: Steel processor Leon Fuat Bhd is stepping up cost efficiency and delivery speed as it braces for rising competition in Southeast Asia, with trade diversion risks looming from expanded United States steel tariffs.
Executive director Ooi Shang How said the group is actively tracking changes in global trade flows amid concerns that steel products originally bound for the US could flood regional markets instead, pushing prices down and squeezing margins.
"Although we do not export directly to the US, the indirect impact from trade diversion is real. An oversupply in Southeast Asia could drive up competition and weigh on prices," he told Business Times.
To stay ahead, the company is banking on cost-competitive pricing, swift turnaround, and a widening product range, including larger steel pipes under its ongoing expansion.
"We continue to optimise our processes, invest in faster and more efficient cutting technologies, and uphold high quality to offer clients a one-stop, timely solution," said Ooi.
He said Leon Fuat's diverse customer base across sectors also cushions it from volatility, allowing strong segments to offset weaker ones.
"The steel industry is inherently volatile, so adaptability, efficient inventory management, and transparency, including write-downs when prices fall, are essential to sustaining profitability," he said.
Leon Fuat processes and trades various flat and long steel products and manufactures welded pipes, perforated sheets, and expanded metal. Its latest automation upgrades include a fibre laser cutter that performs five times faster than conventional machines.
Even in a crowded steel pipe manufacturing market, Ooi believes the group's mix of quality, speed and cost-effectiveness offers a distinct edge.
"We recognise how critical project schedules are to clients. Our ability to meet timelines consistently sets us apart," he said.
As Leon Fuat prepares for increased competitive pressure in the region, its focus remains on agile operations and expanding its product capabilities to strengthen market share.
For the first quarter ended March 31, 2025, Leon Fuat's net profit slumped 83 per cent year-on-year to RM1.4 million from RM8.22 million, weighed down by weaker average selling prices and narrower margins across its steel portfolio.
Revenue declined to RM212.52 million from RM225.26 million, dragged by a 15.9 per cent fall in contributions from its steel trading segment to RM64.11 million. The drop was attributed to both lower tonnage and softer selling prices for flat and long carbon steel products.
As at end-March, the group held RM25.62 million in cash and bank balances against total borrowings of RM464.68 million. Net assets per share inched up to RM1.74 from RM1.73 as at Dec 31, 2024.
On Friday, shares of Leon Fuat closed unchanged at 37 sen, with 22,700 units traded. This gave the company a market capitalisation of RM126.17 million. Year-to-date, the stock has fallen 21.28 per cent from 47 sen on Jan 2.
