KUALA LUMPUR (Aug 11): Hup Seng Industries Bhd recorded a 59.1% drop in second quarter net profit to RM3.58 million, from RM8.76 million a year ago, dragged by low biscuits revenue and rising costs of the main raw materials. 

Revenue for the quarter ended June 30, 2021 was down 7% to RM66.5 million, from RM71.44 million previously, mainly due to the mandatory compliance of 60% workforce from May, the group said in a filing to Bursa Malaysia.

For the first half of the year, Hup Seng reported a 27.2% decrease in net profit to RM13.45 million from RM18.47 million in the same period last year, while revenue fell 2% to RM149.24 million from RM152.32 million. 

Hup Seng said the lower sales, coupled with the increase in prices of certain raw and packing materials during the first half, depressed its profit performance.

The group said the enhanced lockdown measures that were announced across much of Selangor and parts of Kuala Lumpur have resulted in a sharp hit to consumption, thereby impacting manufacturing and export activities. 

Hup Seng said it remains optimistic and cautious about the prospects of the biscuits industry and will enhance the competitiveness of the products and increase the group’s market share.

"The greatest challenge to the group over the next two quarters would probably be the rising materials costs, which are unfortunately not able to be recovered in the immediate term," it added. 

Hup Seng’s share price closed two sen or 2.02% lower at 97 sen, for a market capitalisation of RM776 million.