PETALING JAYA: Ann Joo Resources Bhd posted a 40.9% drop in its net profit to RM19.52 million for the fourth quarter ended Dec 31, 2019, from RM33.02 million seen at the same time last year, primarily attributable to selling prices and the domestic supply-demand imbalance.
The group explained that the imbalance of supply-demand in the domestic market was largely due to excessive supply from foreign-owned steel mills and weak demand.
Revenue for the quarter declined 10.7% to RM603.71 million, from RM675.73 million due to lower selling prices and domestic sale tonnage despite higher export tonnage sold in the fourth quarter and over the full year.
For FY19, the group entered into the red with a net loss of RM89.86 million, from a net profit of RM149.54 million previously. Revenue was 4.3% lower at RM2.22 billion from RM2.32 billion in FY18.
Looking ahead, Ann Joo said its performance in FY20 ending Dec 31 is highly dependent on the rectification rate of the domestic supply-demand imbalance situation as well as the steel price trends in domestic and export markets.
It noted that steel bar prices have regained their upward momentum, while the oversupply situation in the domestic market was, to some extent, mitigated as a foreign-owned steel mill managed to channel substantial production tonnage to export markets.
“There are also signs of improvement in market sentiment following the renewed announcements of the revival of selected mega infrastructure and development projects, and construction activities are expected to ramp up eventually,” it said.
However, the Covid-19 outbreak has disrupted the supply chains and steel prices, but Chinese steel consumption is expected to be supported by the government’s proactive fiscal and monetary policies going forward.
