Malaysia-based steel maker, Ann Joo Resources is hopeful of a resilient fiscal year in 2020. Ann Joo reported improvement in the December quarter after posting a loss of MYR89.86mn ($21.22mn) in 2019.
The company reported a 41pc fall in net profit at MYR19.52mn from MYR33.02mn in the prior year. The decline in net sales is due to lower selling prices and an imbalance in the demand and supply in the domestic market.
Ann Joo expects 2020 will be a better year for the company given the resumption of multiple mega structure projects and the rise of steel prices. The domestic steel bar price rose in Q4 from extremely low levels in Q3 and continued the trend in January and February, said the company’s earnings report. Also in early 2020, the oversupply in the domestic market was mitigated as a foreign-owned steel mill managed to channel substantial production tonnage to export markets.
The recent outbreak of coronavirus in China has disrupted global supply chains and steel prices, contributing to short-term market uncertainty and risks, said the company. Despite the potential slowdown in steel demand and low output expected in Q1 2020, Chinese steel consumption is expected to be supported by the government’s proactive fiscal and monetary policies, going ahead. On the other hand, there are also signs of improvement in market sentiment following the renewed announcements of the revival of selected huge infrastructure and development projects, and construction activities which are expected to ramp up eventually.
For 2019, consolidated revenues fell by 4pc to MYR2.22bn from MYR2.32bn in the year prior amid lower selling prices of manufactured products and low domestic sale that offset higher exports reported by the company. Ann Joo posted a loss of MYR89.86mn compared to a profit of MYR149.54mn in the prior year.
Ann Joo Integrated Steel Sdn Bhd (AJIS) is engaged in the manufacturing and trading of iron, steel and steel related products. The iron-making plant has an annual capacity of 500,000 metric tonnes. Ann Joo Steel Berhad (AJSB) manufactures long products and operates an upgraded 100mt Electric-Arc-Furnace (EAF) plant with an annual rated capacity of 820,000mt and three rolling mills with a total annual rated capacity of 650,000mt.
($1 = MYR4.23)