KUALA LUMPUR (Nov 14): Daibochi’s third quarter net profit declined 21.2% to RM5.69 million from RM7.22 million a year ago, due to higher raw materials cost, particularly for solvent and polyester film.

Earnings per share for the quarter ended Sept 30, 2018 fell to 1.73 sen, from 2.2 sen previously.

This is despite a 7% increase in quarterly revenue to RM109.19 million from RM102.03 million, the group said in a filing with Bursa Malaysia.

Total net profit for the first nine months of the financial year ending Dec 31, 2018 (FY18) fell 6.7% to RM16.81 million from RM18.03 million in the previous corresponding period, while revenue grew 13.19% to RM320.3 million from RM282.99 million.

Going forward, Daibochi said while its prospects remain intact, the group may continue to face high raw material prices, rising operating costs, and fluctuation in foreign currency exchange rates in the near term.

“We would continue to monitor such challenges and strategize to mitigate their impact accordingly. We have engaged with the relevant government agencies to address the issue of sales tax imposed on imports from the Myanmar plant into Malaysia, following the implementation of the sales and services tax in Malaysia since September 2018,” it said.

Daibochi said it received approval for a sales tax exemption on certain products from Daibochi Myanmar in October.

“With this interim measure, we are able to resume exporting from Daibochi Myanmar to our Malaysia plant,” it said.

The group believes that demand for flexible packaging in Southeast Asia, especially in the food and beverage (F&B) and fast-moving consumer goods (FMCG) sectors will continue to see robust growth.

“The positive outlook is supported by the region’s growing population, improving purchasing power, and shifting consumer preferences led by urbanisation,” it said.

Therefore, the group said it is optimistic of achieving better top line performance for FY18, driven by larger flexible packaging shipments to the Malaysia and export markets for its multinational corporation clientele’s F&B and FMCG brands.

“Additionally, the group’s Myanmar plant, which commenced operations in the second half of 2017, would provide full-year financial contribution in FY18,” it said.