KUALA LUMPUR (May 25): Steel maker Ann Joo Resources Bhd's net profit fell 17% to RM61.45 million in the first quarter ended March 31, 2018 (1QFY18) from RM74 million a year ago, due to 'unusually high' profit margin in 1QFY17 as a result of a surge in selling prices and lower carrying cost of inventory.

This resulted in lower earnings per share of 11.88 sen for 1QFY18 compared with 14.77 sen for 1QFY17.

Quarterly revenue, however, rose 18% to RM589.06 million from RM499.17 million a year ago, mainly contributed by higher selling prices, in line with the up-trend of international steel prices.

In a filing with Bursa Malaysia today, Ann Joo said the improved revenue performance was further supported by higher domestic tonnage sold on gradual improvement in local demand from construction progress of various infrastructure and large-scale development projects.

While long-term prospects are positive, Ann Joo expects a seasonally lower second quarter of 2018 due to seasonal factors that typically affect construction activity, including the Ramadan month and Raya holiday.

"The group is confident that the new government will put in place necessary measures to drive economic growth and efficient fiscal spending," it said.

Given the fundamental drivers such as China's continued efforts on steel industry reform and its robust domestic demand, and expected robust domestic demand from Malaysia's construction activities, as well as continued enhancements in the group's operating efficiency, Ann Joo is expecting its performance to remain satisfactory in the remaining period of 2018.

Ann Joo shares closed up 2 sen or 0.8% at RM2.52 today, bringing a market capitalisation of RM1.41 billion.