Another quarter, another look into the performance of Malaysia’s steel industry stalwart, Ann Joo Resources Berhad. Today, we’re diving deep into their unaudited condensed consolidated interim financial statements for the first quarter ended 31 March 2025 (1Q2025). While the headline numbers might suggest a challenging period, a closer look reveals a company actively navigating headwinds and strategically positioning itself for future growth.
The core message from this report is clear: Ann Joo is facing significant market challenges, particularly in the steel sector, which has impacted its top and bottom lines. However, the company is not standing still; it’s implementing crucial cost management strategies and exploring new growth avenues. Let’s break down the key figures and what they mean for this Malaysian industrial player.
Core Financial Highlights: A Quarter Under Pressure
The first quarter of 2025 saw Ann Joo Resources Berhad grapple with a tough operating environment, leading to a notable decline in revenue and an increase in losses compared to the same period last year. Here’s a snapshot of the key financial figures:
1Q2025
Revenue: RM531.06 million
Loss Before Tax: RM81.90 million
Loss for the Period: RM82.39 million
Basic Loss Per Share: 11.24 sen
1Q2024
Revenue: RM648.08 million
Loss Before Tax: RM17.60 million
Loss for the Period: RM15.90 million
Basic Loss Per Share: 2.66 sen
The group’s revenue decreased by approximately 18% to RM531.06 million in 1Q2025 from RM648.08 million in 1Q2024. This decline was primarily driven by lower overall sales tonnage and reduced selling prices for various steel products across both the Upstream and Downstream Steel Divisions. Additionally, a temporary scheduled plant shutdown for major refurbishment in December 2024 and January 2025 contributed to the revenue dip in the Upstream Steel Division.
The loss before tax widened significantly to RM81.90 million in 1Q2025, compared to a loss of RM17.60 million in the corresponding quarter last year. This larger loss is attributed to depressed profit margins resulting from lower selling prices, coupled with higher costs amounting to RM11.86 million due to the temporary plant shutdown, a substantial increase from RM0.88 million in 1Q2024.
Quarter-on-Quarter Performance: Signs of Improvement
While the year-on-year comparison shows a challenging picture, looking at the performance against the preceding quarter (4Q2024) reveals some positive shifts:
1Q2025
Revenue: RM531.06 million
Loss Before Tax: RM81.90 million
4Q2024
Revenue: RM603.43 million
Loss Before Tax: RM117.75 million
Revenue in 1Q2025 was lower than the preceding quarter, 4Q2024, mainly due to reduced overall sales tonnage and lower selling prices of various steel products. However, the loss before tax narrowed significantly from RM117.75 million in 4Q2024 to RM81.90 million in 1Q2025. This improvement can be primarily attributed to the absence of a RM12.08 million provision related to the Amsteel legal case that was recognized in 4Q2024. Furthermore, a RM10.36 million reversal of inventory write-down in 1Q2025, compared to a RM11.07 million provision in 4Q2024, provided additional support to the bottom line.
Segmental Performance Overview
Let’s examine how each business segment performed:
| Segment | 1Q2025 Segment Result (RM’000) | 1Q2024 Segment Result (RM’000) |
|---|---|---|
| Upstream Steel Division | (60,698) | (6,404) |
| Downstream Steel Division | (3,580) | 3,965 |
| Green Technology Division | (4,790) | (1,098) |
| Investment Holding, Property Management and Others | 1,089 | 3,663 |
Both the Upstream and Downstream Steel Divisions recorded losses, with the Upstream segment seeing a substantial increase in losses. The Green Technology Division also saw an increased loss. These figures underscore the challenging market conditions for steel products, impacting the profitability across key divisions.
Financial Health and Cash Flow
Despite the operational losses, the balance sheet shows some interesting dynamics. Total assets decreased slightly to RM2.98 billion from RM3.05 billion at the end of 2024, reflecting adjustments in inventories and other assets. Total equity also saw a reduction, primarily due to the loss incurred during the period.
Positive Shift in Operating Cash Flow
A significant positive highlight from the report is the substantial improvement in cash flow from operating activities. Ann Joo generated RM130.35 million in net cash from operations in 1Q2025, a stark contrast to the RM15.08 million net cash used in operating activities in 1Q2024. This turnaround suggests improved working capital management, with a notable net change in current assets generating RM109.30 million and current liabilities generating RM87.14 million.
Cash and bank balances also increased to RM151.10 million at the end of 1Q2025 from RM107.24 million at the end of 2024, indicating a stronger liquidity position despite the reported losses.
Navigating the Headwinds: Risks and Strategic Prospects
Ann Joo’s management acknowledges the challenging global and domestic landscape. The global economy faces risks from rising tariffs and trade policy uncertainty, which could dampen growth and weaken capital expenditure. China’s steel market, a key indicator, is uncertain despite economic growth, with escalating U.S. tariffs and potential mandatory production cuts looming.
Domestically, Malaysia’s steel industry experienced seasonally low demand in 1Q2025 due to festive seasons, and major infrastructure projects have yet to significantly kick off. Overall market conditions remain soft.
To navigate this uncertain environment, Ann Joo has identified several strategic measures and potential opportunities:
- Cost Management: The company is now able to procure coke, a primary fuel for its blast furnace operations, from highly price-competitive suppliers, particularly new producers in Sulawesi, Indonesia. This is expected to significantly reduce production costs compared to 2023 and 2024.
- Expansion into Steel-Adjacent Businesses: Ann Joo is diversifying its revenue streams through downstream expansion. This includes venturing into the automotive supply chain for value-added steel products (via Tailored Welding Blank and Oscillating Leveller Shear Line) and vertical integration into engineering and infrastructure works for the electrification sector.
- Regional Demand and Property Value-Add: The group is actively exploring regional demand, such as in Singapore, and identifying potential areas to add value to its existing industrial properties.
These strategies highlight Ann Joo’s proactive approach to mitigating risks and seizing opportunities in a dynamic market. The recent acquisition of the remaining 67,500 ordinary shares in Konsortia Etiqa Sdn. Bhd. for RM96 million, making it a wholly-owned subsidiary, further reflects the company’s strategic moves to consolidate its position or diversify.
Summary and
Ann Joo Resources Berhad’s 1Q2025 results reflect a period of significant market challenges, marked by lower steel prices and demand, alongside the impact of a planned plant shutdown. The increased loss before tax compared to the same period last year underscores the pressures on profit margins. However, the quarter-on-quarter improvement in narrowing losses, driven by the absence of a legal provision and an inventory write-down reversal, provides a glimmer of resilience.
Crucially, the substantial positive shift in operating cash flow is a vital sign of operational efficiency and liquidity management, which is paramount during challenging times. The company’s strategic initiatives – focusing on cost optimization through new coke suppliers and diversifying into high-value steel-adjacent businesses like automotive and electrification, along with exploring regional demand – are critical steps towards sustainable growth.
While the steel sector faces ongoing uncertainties from global trade tensions and domestic demand dynamics, Ann Joo’s proactive measures indicate a clear path forward. Investors should monitor the effectiveness of these strategies in improving future profitability and market positioning.
Please note: This blog post is for informational purposes only and does not constitute financial advice. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
What are your thoughts on Ann Joo’s strategic direction given the current market environment? Do you believe their diversification and cost management efforts will be enough to turn the tide in the coming quarters? Share your views in the comments section below!
