KUALA LUMPUR (Feb 21): Box-Pak Malaysia Bhd, whose share price has been going downhill for two years, posted its fifth loss-making quarter in the fourth financial quarter ended Dec 31, 2017 (4QFY17). However, its quarterly losses narrowed to RM817,000 from RM6.28 million a year ago supported by other income gains and deferred taxation in the period.

Quarterly losses per share for the corrugated carton boxes manufacturer shrank to 0.68 sen, from 10.46 sen in 4QFY16. Also supporting the numbers, said Box-Pak in a filing today, were reductions in general and administrative expenses, offset by higher costs for raw materials.

“Gross profit decreased from RM12.9 million in 4QFY16 to RM11.71 million in 4QFY17 due to margin compression attributable to rising paper cost,” it said. “Costs of medium paper and testliners, being the main raw material of the group have risen more than 30% compared with prices in 4QFY16,” it added.

Meanwhile, quarterly revenue grew 12.63% to RM150.35 million from RM133.5 million a year ago — thanks to upward adjustments in average selling price (ASP) to partially absorb the higher costs, said Box-Pak.

However Box-Pak’s cumulative losses for its full financial year ended Dec 31, 2017 (FY17) ballooned to RM15.35 million from a mere RM853,000 the year before, mainly on higher costs incurred — paper costs for the full-year period was higher “by at least 20%” compared with FY16, it said.

Adding to the losses were pre-operating costs incurred in Myanmar and higher finance and administration costs, it added.

This is despite full-year revenue rising 10.39% to RM552.75 million from RM500.71 million in FY16, which was contributed by upward adjustments in selling prices in Malaysia and Vietnam, and favourable exchange rates in translating sales denominated in Vietnam Dong, said Box-Pak.

“The main challenges faced by the group in the FY17 was the sharp and continuous rise in paper cost. This will continue to affect the group's performance in the coming financial year,” it said.

The group also conceded that it will face headwinds from the compulsory contribution by Malaysian companies into the Employment Insurance Scheme and levy on foreign workers, a 6.1%-7% hike in minimum wage in Vietnam, and the recent uptick in Bank Negara Malaysia’s overnight policy rates — all implemented early this year.

“Faced by these cost pressures, the management will continue to review its selling price to key customers whilst stepping up its efforts to bring down its operating costs in 2018,” it said.

“The group will also continue to upgrade its production equipment to improve efficiency,” it added.

Box-Pak added that development of its new plant in Myanmar is currently in progress and it is expected to commence operations in the second half of the year. “However, pre-operating cost will continue to be incurred,” it said.

Shares of Box-Pak closed unchanged at RM1.22, giving it a market capitalisation of RM146.46 million. The stock price has plunged 58% from its peak of RM2.92 in November 2015.