SGX-listed steel distributor AnnAik has reported earnings of $2.9 million for the 1HFY2022 ended June, some 2.3 times higher than earnings of $1.2 million in the same period the year before.
The surge in earnings was attributable to the higher turnover and gross profit achieved in the distribution and manufacturing of steel flanges divisions fueled by a hike in steel prices and strong demand. The contribution of profit from AnnAik’s environmental division also added to the earnings growth.
Revenue for the same period increased by 71.43% y-o-y to $55.7 million due mainly to the higher sales from both the distribution division in Singapore and manufacturing of steel flanges business. The revenue from both divisions was driven by higher steel prices and higher demand for steel and non-steel products. The increase was, however, offset by lower revenue from the environmental business division due to lesser engineering, procurement and construction (EPC) projects completed in the first half of FY2022.
Gross profit increased by 33.67% y-o-y to $9.8 million, while gross profit margin (GPM) fell by 2 percentage points to 12% due to a change in product mix with lower margins.
Other operating income increased by 8.12% y-o-y to $1.2 million mainly due to the recognition of gain on disposal of property amounting to $0.72 million. Share of result of associate made a loss of $25,000 from the $80,000 profit in the 1HFY2021.
Earnings per share (EPS) stood at 0.99 cents.
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As at June 30, cash and cash equivalents stood at $13.1 million.
The group’s net asset per share stood at 22.47 cents as at June 30.
Looking ahead, the group expects its business outlook to be “challenging” on the back of the current economic uncertainty caused by the geopolitical tensions, global inflation, interest rate hikes and the prolonged zero-Covid policy in China.
With a trending drop in steel prices in the second half of the year, the group will be expecting a lower gross and profit margin from both its distribution and manufacturing divisions, it says.
That said, it expects to remain profitable for the FY2022.
Shares in AnnAik closed flat at 7.3 cents on Aug 10.
