KUALA LUMPUR (May 21): Chemical Company of Malaysia Bhd's (CCM's) net profit fell 37% in its first quarter of the financial year 2019, amid softer prices for chlor-alkali products.
Net profit for the three months ended March 31, 2019 (1QFY19) retreated to RM6.25 million from RM9.98 million in the same quarter a year ago, as revenue dropped 4% to RM96.98 million from RM101.4 million on lower contributions from its chemicals division, according to its stock exchange filing today.
The segment's profit before tax (PBT) for 1QFY19 declined 42% to RM7.8 million from RM13.5 million in the year-ago quarter despite higher sales volume for its key chlor-alkali products, as average selling prices of these products fall on the back of softer prices of the chemical commodity.
Its polymer segment, meanwhile, saw PBT slipping to RM5.09 million from 5.24 million previously, due to additional depreciation incurred on its new building that was acquired in July 2018.
Notwithstanding the decline in revenue and PBT during the quarter under review, the group remains optimistic on its outlook for the year, according to CCM group managing director Nik Fazila Nik Mohamed Shihabuddin in a separate media statement.
"During the first quarter, we completed the divestment of our Nilai land, which raised RM21.5 million, and [we] will be utilising the proceeds to repay borrowings. In tandem with the completion of our degearing exercise, we successfully managed to reduce finance costs by RM3.0 million for the period under review.
"The reactivation of the Pasir Gudang Plant 1 (PGW1), expected to be completed by the second half of 2019, will accelerate the growth of CCM's chemicals business, increasing the total chlor-alkali production capacity by 50% annually," she said.
Meanwhile, she said the group's polymers business is progressing well and is set to advance steadily in tandem with the growth prospects of the global demand for gloves.
CCM is set to hold its 57th annual general meeting on May 28 to present its financial statements and the group's latest updates to shareholders.
CCM shares fell 3.88% or eight sen to close at RM1.98 today, after 65,500 shares were traded, giving it a market capitalisation of RM330.06 million.