KUALA LUMPUR (August 8): YKGI Holdings Bhd (YKGI) recorded a net loss of RM4.67 million for the second quarter ended June 30, 2017 (2Q17) compared with a net profit of RM5.94 million in the previous corresponding quarter last year.

According to its filing with Bursa Malaysia today, the company cited low demand for flat steel products, higher raw material cost and low production quantity as the cause of the loss.

“For the quarter under review, the demand for flat steel products is subdued which caused the selling prices to be soft and (we) are not able to factor in fully the additional cost of raw material. As a result of these factors, the group suffered a compression of gross product margin,” it said in the statement.

Revenue for 2Q17 came in at RM81.48 million, down by 20.4% compared with RM102.37 million in 2Q16.

The company explains that the decrease in revenue is due to lower sales volume on the back of weaker demand prevailing in the quarter.

For the cumulative first six months ended June 30, 2017 (1HFY17), revenue fell 10.9% to RM182.1 million from RM204.42 million for the same period last year. Correspondingly, YKGI incurred a net loss of RM4.58 million for the period compared to a net profit of RM6.04 million in the previous year.

Moving forward, the company sees that it will still be facing a challenging environment for the remainder of the year.

“The local steel market remains weak due to low demand. The market is expected to be soft and challenging for the remaining period of the year,” it said.

It is noted that the annual financial statements of the group for the year ended December 31, 2016 contained a material uncertainty related to going concern. As at Dec 31 last year, the group’s current liabilities exceeded its current assets by RM54.19 million.

In regards to that, YKGI has already started the process of addressing the net current liabilities through asset disposal which was completed in early February this year, bringing net proceeds of RM23.263 million.

“Notwithstanding that, we are still pursuing the implementation of a business turnaround plan. The group is also exploring various financial strategies which will entail among others monetizing its fixed assets,” it added.