KUALA LUMPUR (Nov 22): Box-Pak (Malaysia) Bhd posted a net loss of RM4.43 million in the third quarter ended Sept 30, 2017 (3QFY17) compared with a net profit of RM3.28 million a year earlier on lower gross profit, higher finance cost and pre-operating expenses incurred in Myanmar.

Quarterly revenue, however, grew 17% to RM144.25 million in 3QFY17 from RM123.7 million, thanks to the increase in sales in Malaysia and Vietnam from existing and new customers.

Additionally, the strengthening of Vietnam dong and US dollar against ringgit has also contributed to the increase in revenue, according to the group's filing with Bursa Malaysia.

Box-Pak said 3QFY17 gross profit decreased marginally to RM9.1 million from RM9.6 million due to margin compression attributable to rising paper cost, which it has increased more than 15% year-on-year.

For the cumulative nine-month period ended Sept 30, 2017 (9MFY17), the group recorded a net loss of RM14.54 million against a net profit of RM5.43 million a year ago due to escalating paper cost and production cost, which had contributed to lower gross profit together with the higher finance cost and pre-operating expenses incurred for the Myanmar plant.

Revenue in 9MFY17 climbed 10% to RM402.4 million from RM367.22 million a year earlier, contributed by footwear, and food and beverage segments in Malaysia and Vietnam.

The main challenges faced by the group in the current financial year are the sharp and continuous increase in paper cost since the end of 2016 and the rising competition in Malaysia and Vietnam.

"Since the end of the previous financial year, the average cost of the main paper materials used by the group has increased by more than 20% and is expected to increase further," it said.

Box-Pak said it is in the process of upgrading its production facilities in Malaysia and implementing cost-cutting initiatives to reduce production cost.

"The management is also actively negotiating with its key customers to share the burden of escalating cost," it said.

Box-Pak shares were not traded today. The counter last closed at RM1.33 for a market capitalisation of RM159.66 million.