Steel pipes produced by Tatt Giap at the group's plant in Seberang Prai.
KUALA LUMPUR: Tatt Giap Group Bhd, which made a loss in the last financial year and on Friday reported further losses in the first quarter ended Aug 31, 2017 (Q1 FY17), is mulling more corporate exercises to improve its financial conditions.
In its latest quarterly financial report to Bursa Malaysia, the stainless steel pipe and tube manufacturer said the board was planning several structural measures.
It said it was considering a capital reduction exercise to reduce the company’s accumulated losses, a venture into property development by developing its existing land, and a fund-raising exercise, which may include rights issue, to finance this property project.
Tatt Giap is already implementing a turnaround plan that includes cost-cutting initiatives, asset disposals and fund-raising exercise to replenish working capital funds as well as repay bank borrowings.
The company said global steel prices were expected to rebound following the Chinese government’s initiatives to curb steel production overcapacity, and domestic demand for steel products was expected to be supported by the continued growth in the Malaysian manufacturing sector.
“However, the group can only benefit from the abovementioned external factors if it can first overcome the internal challenges faced by its business operations. These include the clearing out of legacy inventories, highfinance costs and shortage of working capital funds,” it added.
In the latest interim financial report, Tatt Giap announced that it swung to a loss attributable to shareholders of RM975,000 in Q1 FY17 from earnings of RM19.59mil a year earlier. (The results in last year’s corresponding quarter were propped up by a one-off gain on disposal of assets of RM16.23mil.)
Tatt Giap said revenue for the quarter under review slipped 12% to RM21.92mil.
While the company derived higher revenue from Europe and South America, it was not enough to offset fully the 45% drop in revenue in the domestic market to RM10.46mil.
For the last financial year ended May 31, 2017, Tatt Giap reported a loss attributable to the company owners of RM3.01mil on revenue of RM84.35mil.
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