KUALA LUMPUR (May 28): Ipmuda Bhd leapt into a third quarter net profit of RM107,000 from a net loss of RM7.24 million a year earlier, helped by, among others, a RM1.1 million reversal of impairment on receivables during the quarter when the building materials distributor’s revenue dropped as the construction and property development industries contended with the impact of the movement restriction policies in Malaysia to curb the spread of the Covid-19 pandemic.
In a statement to Bursa Malaysia yesterday, Ipmuda said revenue declined to RM12.27 million in the third quarter ended March 31, 2021 (3QFY21) from RM19.1 million.
The company did not declare any dividend for 3QFY21.
According to Ipmuda, the lower sales in 3QFY20 mainly stemmed from the implementation of the Movement Control Order (MCO) and Conditional MCO (CMCO) by the Malaysian government.
Despite the less stringent CMCO during the quarter under review, trade for building materials and finishing products remained slow following the slow recovery pace of the construction and property development industries, Ipmuda said.
"The decline in sales volume during the quarter under review was due to the group’s focus on high-margin products such as finishing products and other general building products, instead of high-volume low margin products such as steel bars and cement,” the company said.
"The group (however) registered a profit before tax of RM18,000 compared to a loss before tax of RM7.2 million in the prior year corresponding quarter, an improvement achieved during the quarter by RM7.12 million. This improvement is mainly due to reversal of bank guarantee claim of RM3.3 million during the quarter under review upon receipt of letter from Ministry of Local Government and Housing of Sabah to cancel the bank guarantee claim after resolving the issue relating to the renewal of developer license with the said ministry," the company said.
Ipmuda said it registered a RM1.1 million reversal of impairment on receivables compared to a RM1.5 million impairment on receivables a year earlier.
"[In quarterly terms,] the group managed to generate turnover of RM12.27 million during the quarter under review compared to 2QFY21 [revenue] of RM6.25 million, a growth of 96.4% in turnover during the quarter. The higher revenue compared to the previous quarter is mainly due to revenue from the Coara Marang Project (solar power project) of RM6.3 million,” Ipmuda said.
For 9MFY21, Ipmuda said cumulative net loss narrowed to RM5.94 million from RM28.86 million a year earlier.
Ipmuda said revenue, however, fell to RM24.67 million from RM76.48 million.
According to Ipmuda, RM28.86 million net loss a year earlier had taken into account a profit after tax from discontinued operations of RM404,000.
Looking ahead, Ipmuda said it foresees the trading business segment will continue to face various challenges in the current Covid-19-driven business environment
The challenges include longer credit period for customers to make payment, pricing competition and timely supply of products due to the impact of the pandemic on the company's product supply chain.
"Nevertheless, the trading business segment remains as the main contributor of revenue to the group and the management of Ipmuda expects that it will continue to contribute to the earnings of the group.
"Whilst the company is continuing to undertake a business efficiency exercise for its trading division, it has recently ventured into sourcing and supplying medical and healthcare products such as personal protective equipment and providing disinfection and sanitisation services to both its existing and new customers in an effort to enhance its products and servicing offering and not relying solely on building materials,” Ipmuda said.
At Bursa’s 12:30pm break today, Ipmuda’s share price settled down four sen or 2.4% at RM1.63 for a market value of about RM133.77 million.
Ipmuda has 82.07 million issued shares, according to its quarterly financial report.