Ann Joo in the red in Q1 on weak selling price, sees weaker Q2

KUALA LUMPUR: Ann Joo Resources Bhd posted net losses of RM6.69mil in the first quarter ended March 31, 2019 which was a stark contrast from a the net profit of RM61.44mil a year ago and it expects a lower second quarter.

The manufacturer and trader of steel and steel related products said on Tuesday its revenue fell by 8.6% to RM528.12mil from RM589.06mil a year ago.

Ann Joo said the lower revenue and the loss incurred in Q1 FY19 were mainly due to lower tonnage sold coupled with depressed selling price in domestic market despite higher export tonnage.

Loss per share was 1.22 sen compared with earnings per share of 11.88 sen.

On the outlook for 2019, Ann Joo expected the remaining months to be remain extremely challenging, arising mainly by the US-China trade war and coupled with the severe domestic oversupply situation.

This was although domestic sentiment has improved with the revival of selected mega infrastructure and large scale development projects, for example the East Coast Rail Link and Bandar Malaysia.

“In the near term however, the group expects a lower second quarter of 2019 due partly to seasonal
factors that typically affecting construction activity, including the Ramadan month and Raya
holiday,” it said.

Ann Joo said the oversupply situation in the domestic industry was still a main concern as steel prices continued to be depressed by foreign-owned steel mills.  It targeted to increase export sales amidst lacklustre near-term domestic demand.

It also said while steel prices had recovered after Chinese New Year, this has been driven largely by higher
raw material and fuel prices.

“As such, the group continues to place a strong emphasis on cost and operating efficiency as well as balance sheet management to proactively manage its debt and inventory levels. 

“The group is also undertaking selective measures to upgrade its production facilities including a mid-term relining exercise for its blast furnace in June 2019 to ensure a sustainable production efficiency of the furnace. The group believes such measures will contribute to its competitive position once steel market recovers,” it said.