Posted on 18 Nov 2016
Steel producer Ann Joo Resources Bhd swung to the black for the third quarter ended Sept 30, 2016 with a net profit of RM22.9mil, compared with a net loss of RM82.3mil in the same quarter a year ago on a recovery in steel product prices.
It said in a filing with Bursa Malaysia that the increased earnings was due to the recovery in the selling price of various steel products as well as significant earnings contribution from the company’s investment in hybrid blast furnace-electric arc furnace technology that has enabled vast improvement to cost structure.
It said the manufacturing and trading divisions had contributed positively to the group, recording segmental operating profits of RM42.49mil and RM5.45mil respectively, compared with segmental operating losses of RM68.7mil and RM3.6mil a year ago.
Revenue for the quarter was flat at RM323.7mil, a marginal 0.5% lower than a year ago.
The company said the lower revenue was attributed to lower tonnage sold due to weak market demand despite the recovery in selling prices of various steel products.
It said revenue for the manufacturing segment fell RM38.4mil to RM171.8mil during the quarter on lower sales tonnage, while the trading segment’s revenue increased by RM36.6mil to RM151.3mil due to higher tonnage sold.
For the first nine months of the year, the company’s revenue rose 3.7% to RM1.4bil, while earnings was at RM120.8mil, compared with a net loss of RM87.8mil.
“The higher profitability was mainly attributable to the recovery in selling prices of various steel products as well as an improved cost structure,” it said.
Against the preceding quarter, revenue was RM260.9mil lower while profit before tax was down by RM55.7mil.
The company said the lower revenue and profitability were mainly due to lower sales and selling prices given the sluggish market demand during the festive season as well as the delay in the rollout of mega infrastructure projects and slowing property development activities.
It added that imports from China had also escalated during the window period prior to the imposition of the provisional safeguard duties on rebar, wire rod and deformed bar in coil on Sept 26 and 27.
On its prospects, the company pointed out that domestic demand for construction steel was expected to improve only in 2017, underpinned by an expected pick-up in construction activities.
The imposition of the provisional safeguard duties, it said, was expected to create a fair playing field for the domestic industry and the company’s performance for the remainder of the year would be satisfactory.
