Steep Losses Shadow Ann Joo’s Q1 Financial Results

Ann Joo Resources Bhd revealed a net loss of RM78.84 million ($18.3 million) for the first quarter ended March 31, 2025, more than five times the RM14.96 million ($3.5 million) loss recorded a year earlier. This marks the fifth consecutive quarterly loss for the steel producer since Q1 2024. The widened loss reflects weaker steel selling prices and a costly scheduled plant shutdown during the period.

The company reported a loss per share of 11.24 sen, compared with 2.66 sen a year ago. Despite this, Ann Joo managed to narrow its loss from the previous quarter, which had seen a heavier loss of RM149.98 million ($34.8 million). However, revenue also declined by 12.19% quarter-on-quarter, reaching RM531.06 million ($123.4 million) in Q1, down from RM604.81 million ($140.6 million) in Q4 2024.

Price Declines & Production Halts Weigh Heavily

The company attributed the loss largely to depressed profit margins caused by falling steel prices globally. “Lower selling prices across both upstream and downstream steel divisions were the main contributors to the decline in revenue and profit,” Ann Joo said in its filing. Additionally, costs related to a planned temporary shutdown amounted to RM11.86 million ($2.8 million), adding pressure on earnings.

Lower steel tonnage produced during the plant shutdown further exacerbated the revenue decline. The shutdown was a necessary maintenance and upgrade operation but came at a high cost during an already challenging market.

Uncertain Market Outlook Dampens Prospects

The steelmaker described the industry environment as “uncertain,” impacted by ongoing trade tensions, soft local demand, and delayed infrastructure projects. “Major domestic infrastructure projects have yet to kick off in terms of significant steel demand, and overall market conditions remain relatively soft,” the company stated.

These factors have collectively stifled steel demand growth domestically, with both private and public sectors postponing large-scale construction activities. This prolongs pressure on local steel producers, including Ann Joo.

Strategic Moves to Reduce Production Costs

In response to the challenging environment, Ann Joo is actively working to trim production costs. A key step is diversifying its coke fuel sourcing by procuring supplies from Sulawesi, Indonesia, a move expected to lower raw material expenses for its blast furnace operations.

“By expanding our supplier base, especially in the coke segment, we aim to secure more competitive pricing and ensure stable supply,” the company explained. This cost rationalization is critical to improving margins in an industry facing tight profitability.

Expanding into Automotive & Electrification Sectors

Seeking to future-proof its business, Ann Joo is broadening its portfolio beyond traditional steel manufacturing. The company is entering the automotive supply chain and exploring electrification infrastructure projects.

“These new ventures represent growth avenues aligned with global trends towards electrification and sustainable transportation,” the company noted. The move into higher value-added sectors could provide more stable demand and help mitigate risks tied to commodity steel price volatility.

4. Key Takeaways:

• Ann Joo Resources posted a Q1 net loss of RM78.84 million ($18.3 million), driven by lower steel prices and RM11.86 million ($2.8 million) in costs from a scheduled plant shutdown.

• Revenue declined 18% year-on-year to RM531.06 million ($123.4 million), reflecting softer demand and production challenges.

• The company is reducing production costs by sourcing coke from Indonesia and diversifying into automotive supply and electrification infrastructure to offset market risks.