KUALA LUMPUR (Nov 10): Hup Seng Industries Bhd’s net profit for the third quarter ended Sept 30, 2021 (3QFY21) shrank by 65.94% to RM4.08 million against RM11.99 million last year, on lower biscuit sales as well as increase in costs of main raw materials.

Consequently, earnings per share fell to 0.51 sen compared with 1.5 sen a year earlier, the biscuit maker’s filing with Bursa Malaysia on Wednesday showed.

Hup Seng’s revenue in 3QFY21 fell 25.76% to RM64.78 million from RM87.26 million in 3QFY20. The group noted sales orders for its products were not able to be fulfilled mainly due to the temporary two weeks' suspension of operations in September for disinfection as well as the mandatory compliance of operating with a 60% workforce.

“To this effect, production tonnage lost during the quarter under review was about 30.7% resulting in reduction in revenue,” it said.

Hup Seng noted that the biggest challenge to the group will be the rising material costs, as the costs are not expected to normalise in the immediate term.

“The group will continue to put in effort to enhance the operating efficiency in order to mitigate the impact of high input costs as low as possible and will increase selling prices as and when necessary.

“Nevertheless, the group remains optimistic about the prospects of the biscuits industry given the effort by the government on the progress of the Covid-19 National Immunisation Programme, and the gradual recovery of global trade and [the] economy as Malaysia transits towards an endemic phase, where restrictions are relaxed and most economic sectors will reopen. The Group [also] will continue to explore new markets to broaden its revenue and enhance the competitiveness of the products,” it added.

For the nine months ended Sept 30, 2021 (9MFY21), the group’s net profit dropped 42.44% to RM17.53 million versus RM30.46 million a year earlier, while 9MFY21 revenue declined by 10.67% to RM214.03 million from RM239.58 million.

On a quarterly basis, Hup Seng’s net profit rose 14.08% from RM3.58 million in 2QFY21 mainly contributed from the financial assistance of the Wage Subsidy Program amounting to RM750,000.

Revenue in 3QFY21 slipped 2.57% from RM66.5 million in 2QFY21 due to the drop in both domestic and export markets.

Shares of Hup Seng ended half a sen or 0.55% lower at 90 sen on Wednesday’s market close, with a market capitalisation of RM720 million. It saw some 212,800 shares transacted.