KUALA LUMPUR (Feb 21): Troubled steelmaker Perwaja Holdings Bhd's net loss narrowed to RM62.91 million in the second quarter ended Dec 31, 2016 (2QFY16), from RM164.96 million in the same period last year, as operating expenditure shrank some 80%.
 
Perwaja said its losses for the quarter were mainly from interest expense of RM34.7 million, depreciation charges and a RM7.9 million equipment write-off, the company said in a filing with Bursa Malaysia this evening.
 
Perwaja’s quarterly revenue, which it derives from the training and education segment, declined by 56% to RM71,000 in 2QFY16 from the RM162,000 it chalked previously.

Its income statement showed operating expenditure was down to RM29.87 million from RM152.16 million previously.
 
For the cumulative six months ended Dec 31, 2016 (6MFY16), Perwaja's net loss was reduced to RM125.3 million from RM227.04 million, though revenue fell 50% to RM153,000 from RM308,000.
 
Going forward, Perwaja said its prospects will continue to be challenging, particularly after the government-owned Corporate Debt Restructuring Committee will no longer assist in the mediation with its creditors.
 
Meanwhile, Perwaja’s largest shareholder, Kinsteel Bhd, saw its 2QFY16 net loss reduced to RM8.26 million from RM16.82 million in the same period a year ago, on improved steel prices and higher productivity at its subsidiaries, though revenue was flat at RM73.85 million versus RM74.3 million previously.
 
In 6MFY16, Kinsteel’s net loss shrank to RM19.73 million from RM35.32 million, though revenue slid 3% to RM125.24 million from RM128.8 million previously.
 
On prospects, Kinsteel echoed Perwaja's sentiment, saying it expects the outlook to remain challenging.
 
“The group’s prospect is highly dependent on the successful implementation of the proposed restructuring scheme with its financial lenders and major creditors,” said Kinsteel, which owns a 28.39% stake in Perwaja.
 
“The company [needs to be] operating profitably to generate sufficient cash in the future to fulfill their obligations as and when they fall due, and financial support from the lenders and shareholders,” Kinsteel added.
 
Kinsteel and Perwaja are financially-distressed companies that have been classified as Practice Note 17 companies by the local stock exchange.
 
Kinsteel shares closed slid 0.5 sen or 11.1% to four sen today, for a market capitalisation of RM41.7 million. Meanwhile, Perjawa shares ended the day 0.5 sen or 8.33% higher at 6.5 sen, valuing it at RM36.4 million.