Annjoo first steel company to report profit!

ANN JOO RESOURCES BHD posted very sharply lower net profit of RM2.22 million in the second quarter ended June 30 from RM180.51 million a year ago due to lower steel prices which resulted in a margin squeeze.

It said on Aug 25 revenue fell 39% to RM424.3 million compared with RM706.5 million while earnings per share was 0.44 sen compared with 35.17 sen.

For the first half, it posted net loss of RM36.65 million compared with net profit of RM285.45 million a year ago. Revenue fell to RM644.43 million from RM1.377 billion.

Ann Joo said the 1H decline in revenue was mainly due to lower selling price of various steel products. However, the group registered higher export sales to mitigate the lower domestic sales.

"The group's profitability was affected by lower steel prices currently as compared to the robust international steel market in the first half of the year 2008 which resulted in a margin squeeze in the financial period under review," it said.

When compared with 1Q ended March 31, 2009, it said the revenue in 2Q of 424.30 million was 93% higher from RM 220.13 million in 1Q.

"This was mainly attributed to improved sales tonnage from both domestic and international market. The group managed to secure substantial export sales in particular from Southeast Asia countries as a result of better market sentiments which were boosted by the rollout of various economic stimulus packages worldwide," it said.

It added the pre-tax profit of RM 2.67 million in 2Q compared with pre-tax loss of RM41.12 million in 1Q was due to the revitalisation of the group's earnings.

The better earnings were underpinned gy a significant improvement in export sales coupled with better cost structure arising from improved production efficiency in 2Q compared with higher overhead expenses when the plant was shut down for upgrading in 1Q.

Annjoo is the first steel company to report profit. Masteel, Kinstel and Ssteel report losses.

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