CCM 4Q net loss widens on impairment loss

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KUALA LUMPUR (Feb 26): Chemical Co of Malaysia Bhd (CCM) saw its net loss for the fourth quarter ended Dec 31, 2014 (4QFY14) widen to RM47.47 million or 10.37 sen per share, from RM17.17 million or 3.75 sen per share, on recognition of an impairment loss of RM36.8 million from its plant in Medan, Indonesia.

Revenue in the quarter dropped 18% to RM239.99 million, from RM293.54 million, dragged by lower sales in its chemicals (down 8%) and fertilisers (down 38.1%) divisions, the group’s filing to Bursa Malaysia today showed.

The weaker results throughout the year pulled CCM (fundamental: 0.35; valuation 1.8) into the red for the full year ended Dec 31, 2014 (FY14), with a net loss of RM43.85 million or 9.58 sen, compared to a net profit of RM647,000 or 0.14 sen a year ago, while revenue slipped 15.5% to RM1.09 billion, from RM1.29 billion in FY13.

On a segmental basis, CCM’s pharmaceutical division saw its segment profit grew by 12.2%, thanks to its ethical business; while the chemicals division’s segment profit slid 7.8% on lower sales. The group’s fertilisers division continued to bleed, with its net loss widened by nearly five times, as it closed its manufacturing plant in Indonesia.

Going forward, CCM said it will continue to focus on enhancing business profitability by increasing sales locally and regionally, as well as improving production efficiency and cost effectiveness across all its business divisions.

It expects its pharmaceuticals division to remain relatively stable, as it consolidates its position in the local and regional markets and focus on biotherapeutics, niche therapeutic areas, and the halal business.

As for its chemicals business, CCM said it will increase its trading margin, while expanding its customer base within the region.

However, CCM foresees its fertilisers division to remain challenging, in anticipation of lower crude palm oil (CPO) prices.

Overall, CCM said it remains positive for a better operating results FY15, albeit on a challenging business environment.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuation).