KUALA LUMPUR (Nov 8): DKSH Holdings (Malaysia) Bhd posted a 8% year-on-year decline in its net profit to RM9.19 million for the third quarter ended Sept 30, 2018, on cost increases. 

Revenue grew 10.7% to RM1.52 billion, from RM1.37 billion a year ago (3QFY17), on the back of organic growth from existing clients, particularly in the logistics segment. At the same time, operating expenses saw a similar expansion of 10.7% to RM 1.5 billion, which DKSH said was in line with revenue growth.  

In a stock exchange filing, DKSH said the lower net profit in 3QFY18 was also due to a one-off other income recorded in the corresponding quarter of 2017. 

For the cumulative nine months (9MFY18), net profit dipped 6.4% to RM34.05 million, despite revenue rising 6.8% to RM4.41 billion. Operating expenses rose 6.9% y-o-y from RM4.08 billion to RM4.37 billion during the period. 

"However, the cost increase for the period was slightly higher than the growth in revenue, due to a change in product mix which led to a corresponding small increase in cost of goods sold and [a] slight increase in cost base to support future growth," DKSH said, adding that its outlook for the rest of the year is “overall neutral”.    

While it remains positive on its logistics segment, DKSH said prospects for its marketing and distribution segment are less positive, due to short-term volatility relating to the introduction of SST. It added that a one-off negative impact from a specific client contract impacted the third quarter, but is not expected to affect its fourth quarter.  

There are two market trends that will support its positive medium-to-long term outlook for the group, it said, namely the country's growing middle class that supports demand for consumer goods and healthcare products, as well as an increasing focus by manufacturers on core competencies, which lead them to seek specialised service providers to grow with. 

DKSH closed up 2 sen or 0.66% to RM3.05 today, for a market capitalisation of RM480.86 million.