This article first appeared in The Edge Financial Daily on December 8, 2017

KUALA LUMPUR: SCGM Bhd’s net profit slipped 3.1% to RM5.26 million in the second quarter ended Oct 31, 2017 (2QFY18) from RM5.43 million a year ago, due to a change in sales mix and higher cost of raw materials during the current quarter under review.

Earnings per share fell to 2.74 sen in 2QFY18 from 4.11 sen in 2QFY17.

Quarterly revenue, however, was up 24% to RM52.11 million from RM42.02 million in 2QFY17, mainly due to strong domestic sales as a result of intensified marketing efforts and increased capacity from the recently commissioned Klang Valley factory.

The group also declared a second interim dividend of 1.5 sen for the financial year ending April 30, 2018 (FY18), payable on Jan 12, 2018.

For the cumulative six months (6MFY18), the thermoform food packaging manufacturer saw net profit fall by a marginal 0.8% to RM10.85 million from RM10.94 million a year ago, even though revenue grew 32.4% to RM105.77 million from RM79.89 million in 6MFY17.

On prospects, the group foresees that the new Kulai factory targeted to be completed in the fourth quarter of FY18 will contribute positively to its future revenue and net profit following the expansion of its production capacity and installation of new production lines.

“Moving forward, with the larger scale of operation and gain from economies of scale, the group will continue to formulate new marketing strategies and expand our product ranges to drive our financial performance to greater heights,” said SCGM in a filing with Bursa Malaysia yesterday.

In a separate statement, SCGM managing director Datuk Seri Lee Hock Chai said the new factory in Kulai is currently 85% constructed.

“All said, FY18 would be a year of investment so that SCGM marks a higher growth spurt in the future,” he added.

Together with the Klang Valley plant and new Kulai factory, the group’s production capacity is set to increase to 67.6 million kg per year in December 2018.

SCGM shares closed up three sen or 1.11% to RM2.72 yesterday, with a market capitalisation of RM519.49 million.