Ann Joo commissions blast furnace, posts 3Q loss

KUALA LUMPUR: Ann Joo Resources Bhd has commissioned its RM650 million blast furnace in Seberang Perai, Penang, with an annual capacity of 500,000 tonnes.

In a filing with Bursa Malaysia yesterday, Ann Joo said it had successfully commissioned the blast furnace on Oct 16. Its group managing director Datuk Lim Hong Thye said the group is now working to optimise and stabilise the blast furnace operations, and the integration of iron and steel production.

The blast furnace is expected to save up to 40% of the group’s existing electricity consumption for its existing steelmaking plant. The group would also be able to switch between iron ore, coke and scrap as feed materials.

Ann Joo posted a net loss of RM24.5 million for the third quarter ended Sept 30 (3QFY11), compared to RM10.36 million net profit a year earlier, due to diminishing inventory value and foreign exchange losses. This was despite revenue rising 87% to RM625.2 million from RM333.9 million.

Ann Joo said the higher revenue was attributed to recovering international and domestic demand. However, it reported a net loss due to an allowance for diminution in value of inventories of RM38.93 million as a result of contracting steel prices. It also recognised a foreign exchange loss of RM22.5 million due to the weakening ringgit.

Moving forward, Ann Joo said steel prices were expected to go beyond cyclical downturn and remained cautious for 4QFY2011.

Ann Joo closed unchanged at RM1.98 yesterday with 225,000 shares done.