China Steel net profit up 69-fold

China Steel Corp’s (CSC, 中鋼) net profit last year surged about 69-fold from 2020 on the back of rising steel prices and higher sales, enabling it to propose its highest dividend payout in 14 years.

The nation’s only integrated steelmaker said in a regulatory filing on Friday that its board of directors had approved a plan to distribute a cash dividend of NT$3.1 per common share based on last year’s earnings per share of NT$4.02.

Last year, China Steel paid a cash dividend of NT$0.03 per share based on earnings per share of NT$0.05 in 2020.

The last time the company offered a dividend of more than NT$3 per share was in 2008, when it paid a cash dividend of NT$3.5 and a stock dividend of NT$0.3, after posting earnings per share of NT$4.49 in the previous year.

In Friday’s filing, the Kaohsiung-based company reported an annual revenue increase of 48.78 percent to NT$468.33 billion (US$16.71 billion) last year, compared with NT$885.87 million in 2020, when the company’s business was seriously affected by the COVID-19 pandemic.

Gross margin improved to 20.35 percent from 4.8 percent in 2020, and operating margin grew to 17.03 percent from 0.73 percent. The company’s net income increased 6,904.8 percent to NT$62.05 billion from NT$885.87 million.

Analysts said that China Steel’s substantial improvement in profitability reflected the recovery in global demand, including from automakers and the machine tool industry, as well as increased investment in infrastructure by governments.

Meanwhile, Taiwan’s positive market momentum was supported by a strong real-estate market, construction of infrastructure and manufacturers returning to the nation, they added.

With the company’s stock price closing at NT$36 on Friday on the Taiwan Stock Exchange, the proposed cash dividend would translate into a dividend yield of 8.61 percent, much higher than the interest rates on fixed-term deposits offered by local banks.