Written by The Edge Financial Daily
Monday, 17 August 2009 20:10
KUALA LUMPUR: SINO HUA-AN INTERNATIONAL BHD [ HUAAN 0.545 -0.010 (-1.802%) ] posted net losses of RM13.28 million in its second quarter ended June 30 compared with net profit of RM36.92 million a year ago as the coking industry was badly hit by the downturn in the steel and metallurgical coke industries.
It said on Aug 17 that revenue fell 31% to RM301.76 million from RM434.43 million. Loss per share was 1.18 sen compared with earnings per share of 3.29 sen.
The company said in 2Q consolidated revenue was RM301.76 million but the cost of sales was higher at RM306.5 million.
"The falling short of gross profit level was due to the coking industry which has yet to fully recover from the tough and challenging business environment besetting the steel and metallurgical coke industries since the fourth quarter 2008, although it is evident that the trend is gradually moving towards a favourable direction," it said.
Sino Hua-An said the group was seeing signs of recovery since first quarter 2009 and as a consequence, the extent of the losses in 2Q was significantly reduced by 44% compared with 1Q09.
It said the 2Q revenue was impacted by the 40% reduction in the average price of coke in current quarter under review compared with that of the preceding year corresponding quarter.
"The significant reduction in prices of the by-products, namely ammonium sulphate, crude benzene, tar oil, coal slimes, middlings and coal gas, compared to that of the preceding year corresponding quarter also put a damper to the revenue growth of the group for the current quarter under review," it said.
The company said the average price of the coking coal, although had also eased downward during 2Q compared to a year ago, had reduced by only 29%.
As a result of the extent of the fall in the price of coking coal being relatively lower than the drop in the prices of coke, the group's still relatively high cost of sales in the current quarter under review resulted in it turning in a gross loss of about RM4.8 million and loss before tax of about RM13.3 million in the current quarter under review.