AGV Group's full-year loss nearly triples to $12.1m

SINGAPORE - A surge in zinc prices and structural damage to its zinc kettle dragged down AGV Group's results for the full-year ended Sept 30, with its net loss almost tripling from a year ago.

The group, which makes galvanised steel and repairs corroded metals, on Thursday night (Jan 31) posted a net loss of $12.1 million, from a net loss of $4.1 million a year earlier. This translated to a loss per share of 10.88 cents, from a loss per share of 3.40 cents in the year-ago period.

No dividend has been declared.

Revenue for the 12-month period more than halved to $8 million, down from $18 million in the preceding year.

AGV noted that fiscal 2018 was a difficult year for the group due to two main reasons.

Firstly, a sharp increase in zinc prices by up to 44 per cent over the previous year had led to a significant increase in its unit cost of production, as a major component of the group's consumables used is zinc, it said. However, the group was unable to pass on the incremental costs successfully.

Secondly, structural damage to the zinc kettle requiring repair works and subsequent replacement of the kettle had caused work disruptions that led to a slower production rate. This resulted in overall lower production levels, which in turn affected the revenue generated during the financial year, AGV said.

Finance costs also increased from $325,000 in FY2017 to $1.1 million in FY2018, mainly due to the consolidation of its Malaysia subsidiary AGV Galvanizing (M) Sdn Bhd, as well as additional borrowings from private lenders.

In November last year, the group announced that it has been negotiating with existing creditors to extend the tenure of repayment.

According to AGV, negotiations have been "favourable" and it looks forward to agreeing on revised terms so as to ease the group's cash flow.

The group's total liabilities rose by 15.3 per cent to $25.6 million in FY2018 due to an increase in total borrowings and finance leases.

AGV shares last traded at two cents apiece on Jan 28.

Last week, the group announced that two of its directors had resigned. The firm specialising in hot dip galvanising said that its executive director Ang Ghee Ann and its non-independent non-executive director Richard Chung have left "to pursue personal career and other interests".