Friday 29 Mar 2024
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KUALA LUMPUR (Oct 23): Ancom Bhd's net profit slid 70.8% to barely RM494,000 for the first quarter ended Aug 31, against RM1.68 million in the previous corresponding quarter.

The company blamed the poor earning performance on lower sales contribution from the agricultural and industrial chemicals division.

Quarterly revenue declined 15.5% to RM414.25 million, from RM490.23 million. Earnings per shares shrunk to 0.23 sen, from 0.78 sen previously.

Ancom said the effective rate of taxation for the group is higher than the statutory tax rate, due to losses in certain subsidiaries that are not available for set-off against taxable profits in other companies within the group.

For its investment holding, Ancom said this segment reported a loss of RM4.2 million for the current quarter and corresponding quarter last year.

"This is due to corporate expenses incurred by the investment holding companies," it said.

Its agricultural and industrial chemicals posted a revenue of RM352.2 million — a 16.78% drop from RM423.2 million last year.

This, the company attributed to the lower sales in the Indonesian operations, which rationalised its products by discontinuing its loss-making product line.

The agricultural chemical business also faced a slowdown in export sales during the financial quarter, on weaker demand from its overseas markets. The segment reported a profit of RM8.4 million.

Despite this, Ancom said the revenue from the agricultural chemical business is expected to improve in the following quarters.

The polymer division's sales decreased 1.9% to RM29.4 million, against RM30 million previously, due to lower contribution by its manufacturing plant in Surabaya, Indonesia.

Profit before tax (PBT) stood at RM2.6 million, s decrease of 18.75% from RM3.2 million last year, due to weakening of the Indonesian Rupiah, coupled with the competition in the domestic market.

The logistics division's dropped 54.2% to RM7.1 million, compared to RM15.5 million last year, due to the disposal of Sinsenmoh Transport Pte Ltd in December 2013.

Segmental profit decreased to RM0.6 million, from RM1.7 million in the corresponding quarter last year.

Its information technology division registered lower revenue at RM0.8 million, compared with RM1.3 million previously.

In the media division, Ancom said it posted higher revenue of RM27 million, compared with RM21.7 million last year.

"In line with higher revenue, the division posted a segmental profit of RM1 million, against a segment loss of RM1.1 million previously," it said, attributing this to better operational efficiency, and higher advertising contracts secured and delivered.

On outlook, Ancom said among the key business segments, the agricultural and industrial chemical divisions should perform satisfactorily.

"However, there is continued pressure on profit margins, as product suppliers and logistic providers seek higher prices. Competitions in the
agricultural chemical business are expected to intensify in the overseas markets, due to aggressive price competitions," it noted.

Ancom expects its polymer division to be performed satisfactory, despite stiff competitions from cheaper imports.

"After undergoing structural and operational reorganisation in the past, media division is now in a better position for future growth," Ancom said.

The stock was up two sen or 4.5% to close at 46.5 sen, bring its market capitalisation to RM99.43 million.

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