KUALA LUMPUR (March 30): SCGM Bhd saw a turnaround for the third quarter ended Jan 31, 2020 with a net profit of RM4.18 million, compared with a net loss of RM694,000 a year earlier.
This was despite revenue declining 7.2% to RM51.64 million, from RM55.64 million previously.
The thermoform food packaging manufacturer attributed the improved quarterly earnings to a better sales mix, lower resin price, lower interest expense and partial utilization of last year’s capital allowance and the reinvestment allowance brought forward to the quarter.
SCGM has proposed a third interim dividend of 0.5 sen per share, to be paid on April 30. This brings the total dividend to-date to 1.75 sen per share, up from 1.25 sen in FY19.
For the nine-month period ended Jan 31, 2020, the group saw its net profit jump five times to RM10.41 million, from RM2.02 million in the previous corresponding period.
Revenue for the nine-months fell 4.77% to RM160.82 million, from RM168.87 million previously.
The group attributable the fall to the group’s focus on higher margin customized packaging products, instead of high volume non-customized food and beverages (F&B) packaging, as well as higher-than-usual sales from the tax-free period in June to August 2018, after the removal of Goods and Services Tax.
“Furthermore, the revenue decline was partly attributable to lower-than-usual sales in 3Q2020, which was affected by the Chinese New Year holiday period and ban on heavy vehicles during the holiday period,” SCGM added.
In a separate statement, SCGM managing director Datuk Seri Lee Hock Chai said the resounding financial turnaround is a testament to the group’s strategic shift of not only focusing on higher margin products, but also intensive push in expanding into the new overseas market.
Meanwhile, the group has allocated RM1 million of capital expenditure for the production of protective medical equipment, which comprises medical face shields and face masks.
“Not resting on our laurels, we have expanded our product portfolio by producing protective medical equipment. This expansion is both timely and necessary, in order to urgently provide front liners with essential equipment to combat the Covid-19 pandemic in Malaysia.
“This swift activation of providing face shields and face masks speaks volumes of SCGM’s versatile manufacturing expertise, as well as our deep-rooted network of supplying medical equipment,” Lee stated.
Since commencement of the group’s face shield production in February, SCGM has delivered RM2.9 million in sales to-date and is actively engaging with the Malaysia medical community by supporting and equipping them with the crucial protective equipment.
On prospects, Lee said the group remains cautiously optimistic of navigating through this unprecedented challenging landscape, as the group is able to operate at 50% of the total production capacity during the movement control order period, which in line with a directive from the Ministry of International Trade and Industry (MITI).
“This ruling enables us to continue meeting essential product delivery commitments in support of our customers, especially in the essential F&B sector.”
“Additionally, we also would like to reassure our foreign customers that there would be no disruption of supply, despite the Covid-19 pandemic, as our distribution channels to Singapore by land and other export destinations via ports remains intact.” Lee added.
On top of that, the group had fully consolidated its production in Telok Panglima Garang, Selangor with the headquarters’ production in Kulai, Johor since March, which enables them to enjoy better economies of scale and achieve higher output per worker.
SCGM’s shares price jumped 30 sen or 28% to RM1.37 today, bringing ia market capitalization of some RM262.39 million. The counter saw some 6.6 million shares traded.
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