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  28 May 2009 - AISB continues to be in the red


AMALGAMATED INDUSTRIAL STEEL Bhd (AISB) continued to be in the red in the first quarter (1Q) ended March 31, 2009 with a net loss of RM3.38 million versus a net profit of RM3.13 million a year earlier due to a sharp contraction in steel demand and prices. The steel pipe maker’s revenue dropped 45% to RM24.69 million from RM45.36 million. AISB shares closed 0.5 sen lower at 49.5 sen yesterday.

In the preceding quarter, AISB posted a net loss of RM5.31 million on the back of RM19.35 million revenue. AISB said yesterday there were some signs that the domestic price of steel materials would bottom out by the second quarter of the year.

“Product prices are no longer falling and there are also signs that the steel pipe producers are compelled to lift their product prices to curb the continual adverse product margins,” it added. Earlier at a press conference, AISB executive director Ronnie Lim said despite a dismal 1Q, the company expected to be profitable this year but its hopes were pinned on the recovery in demand in the second half of the year.

“We expect the second half of this year to be better, both in terms of revenue and pricing of products, as the government’s stimulus package plan takes effect,” he told reporters after the company’s AGM in Shah Alam yesterday. He said AISB, which uses hot-rolled coils to produce steel pipes, had been negatively impacted by the volatile raw material prices. Lim said prices fell from a peak of US$1,190 (RM4,141) per tonne last August to US$800 per tonne in December, a 33% fall within a short period of four months. He also said the company did not expect to undertake further writedowns on inventories this fiscal year ending Dec 31, 2009.

“We are now in the stage of replenishing and restocking,” he added. Lim said AISB saw RM10 million in writedowns of inventories in FY08, in line with other sector industry players’ move to battle adverse margins.

On a separate matter, Lim said AISB and its joint venture partner HG Metal Manufacturing Sdn Bhd (HGMMSB) had decided to hold back capital expenditure for their plans to make and market steel-related products regionally.

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