KUALA LUMPUR (May 28): Corrugated carton maker Muda Holdings Bhd’s net profit dropped 13.45% year-on-year to RM15.71 million in the first quarter ended March 31, 2018 (1QFY18) from RM18.15 million.

The drop in net profit was partly due to higher tax expenses during the quarter which amounted to RM6.73 million versus RM2.39 million a year ago.

On top of that, the group received lower insurance compensation for the fire that occured in 2016. It received RM3.11 million in 1QFY18 compared with RM12.73 million in the previous corresponding quarter.

In the filing with Bursa Malaysia, Muda explained that if the impact of net compensation from the insurer for the fire, which occurred in 2016 was eliminated, the adjusted pre-tax profit of RM19.4 million for the current quarter under review was 2.4 times higher than the adjusted pre-tax profit of RM8.2 million in the previous corresponding quarter.

Quarterly revenue climbed 17.33% to RM371.59 million compared with RM316.72 million last year. Muda’s earnings per share stood at 5.15 sen compared with 5.95 sen a year ago.

Muda said the existing Chinese policy on the import of solid waste is expected to influence the price of waste paper and the demand and selling price of industrial paper positively. The positive outlook of industrial paper will be supplemented by stable demand for paper packaging products as the economy grows.

“Internally, implementation of programmes to improve efficiency and lower production cost will cushion the impact of higher gas tariff, higher operating cost, depreciation and finance cost associated with expansion of a paper machine and installations of new corrugating machine in the year. Therefore, the board believes  Muda will deliver a reasonable level profit for the year,” it added.

In a separate announcement, the group’s 70%-owned subsidiary Intrapac (Singapore) Pte Ltd has acquired an 85% stake in food wrapping paper maker and seller Lonsing Packaging Industries Pte Ltd for S$807,500 or RM2.38 million.

It said the acquisition would enable the group to expand its sales of food packaging products in Singapore. Following the acquisition, Lonsing becomes an 85%-owned subsidiary of Intrapac Singapore that will in turn be a 59.5%-owned subsidiary of Muda.

Also, Muda announced that its major shareholder and non-executive chairman Tan Sri Lim Guan Teik’s son Datuk Lim Chiun Cheong has been appointed as the company’s managing director.

Chiun Cheong, who was previously the deputy managing director, is also the nephew of Muda’s executive director Datuk Lim Wan Peng. Meanwhile, Datuk Azaman Abu Bakar, who was the managing director, has been re-designated as the company’s executive deputy chairman.

Muda’s share price has more than doubled since February from the RM1.20-level to a record high of RM2.86 early this month. The stock closed at RM2.82 today, with a market capitalisation of RM860.24 million.