On behalf of the Board of Directors and the management of WZ STEEL GROUP, I am pleased to present the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended 30th April 2013.
During the financial year under review, the Group registered revenue of RM87 million, representing increase of 3% as compared to RM85 million in the preceding year. The growth was driven primarily by higher sales volume from our trading activities in domestic market. The Group’s profit before tax increased from RM1.3 million in the preceding year, to RM2.8 million in the financial year under review. The increase in the Group’s profit before tax was mainly attributed to gain from disposal of property of RM3.6 million. The financial performance of the Group had been hindered by volatile steel prices, higher cost of sales and operating expenses.
For the financial year under review, the Group’s Manufacturing Division recorded revenue of RM39 million, 8% lower than previous year turnover of RM42.4 million. The lower revenue was mainly due to lower export tonnage coupled with unstable steel prices amidst sluggish market. The segment’s profitability was dampened by inherently low margins which due to lower production capacity and higher production costs despite continuous improvement in production efficiency.
The export division recorded drastic drop of revenue from RM9 million in the previous financial year to RM5.2 million which equivalent to 42.3%. The drop was attributed to weak global economic growth and heavy competition in the overseas marketplace.
The Group’s Trading Division revenue increased by RM6.5 million to RM53.5 million while the segment loss before tax was RM0.3 million for the year under review. Higher revenue was mainly due to aggressive marketing strategies for market share expansion coupled with an improved demand from various steel use industries thus resulted in higher sales volume. Nonetheless, the segment’s profit was influenced by loss from disposal of slow moving inventory.
Development / Prospects
The outlook for the global steel market is expected to remain highly volatile and uncertain for the financial year ending 30 April 2014 with the continuing weak global economic growth especially due to economic slowdown in China and ongoing European sovereign debt crisis.
Given the uncertainty in the industry outlook, the Group will focus on our core strategies to improve our delivery and efficiencies in cost and operations. Upon completion of manufacturing facility by our wholly-owned subsidiary in Indonesia in the last quarter of the financial year ending 30 April 2014, it is expected to contribute to the Group’s performance positively.
In view of the challenging economic and operating environment, the Board has elected to conserve adequate funds to meet the Group’s financial obligations, and therefore no dividend has been declared for the year under review.
On behalf of the Board of Directors, I would like to take this great opportunity to express my sincere gratitude and appreciation to the management and staff for their dedication, loyalty and commitment throughout the year.
I am also profoundly grateful for the steadfast support provided during the year by all our shareholders, customers, suppliers, financiers, advisors, business associates and regulatory authorities.
Last but not least, my deepest appreciation also goes to my fellow Board members for their invaluable insight and wise counsel.
Dato’ Amin Rafie Bin Othman