Weaker Thai ops weighed on Evergreen Fibreboard's 3Q profit

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KUALA LUMPUR (Nov 14): Evergreen Fibreboard Bhd's net profit in the third quarter ended Sept 30, 2017 (3QFY17) declined 10.6% year-on-year to RM15.1 million, from RM16.88 million, despite more revenue, mainly because of lower contribution from its Thailand business.

Its quarterly revenue, however, improved 7.3% y-o-y to RM260.13 million from RM242.35 million, its Bursa Malaysia filing showed.

Evergreen Fibreboard said its quarterly earnings weakened because its Thailand segment's contribution fell to RM3.1 million from RM14.96 million, mainly due to higher log price and higher repairing and upgrading costs incurred on the stoppage line in its plant there.

The rise in revenue, meanwhile, was boosted by the commercial run of its new Particle Board Plant in Segamat, Malaysia, and higher average selling price here as the group placed more emphasis on high premium products. It also benefited from the weakening of the ringgit against the US dollar.

For the cumulative nine months of FY17 (9MFY17), the group's net profit fell 41% to RM31.84 million from RM53.96 million, though revenue rose 4.5% to RM768.62 million from RM735.38 million.

The lower cumulative earnings were also due to weaker contribution from its Thailand operations, which was affected by the same issues that trimmed its quarterly earnings.

Moving forward, Evergreen Fibreboard said while the continued resilience in the EU and US economies augurs well for the longer-term prospects of panelboard and furniture markets, the group's performance is still impacted by the short supply of rubber wood logs, thus resulting in higher prices.

"Although supply has improved in the third quarter, the monsoon season in the fourth quarter may cause wood supply to decrease. Should there be a severe log supply shortage, the group's fourth quarter result could be negatively impacted," it said.

"However, if there is improvement in log supply, the group expects satisfactory results in the fourth quarter," it added.

Evergreen Fibreboard settled unchanged at 76 sen today, valuing it at RM643 million.