WTK returns to the black in 2Q on higher contribution from timber division

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KUALA LUMPUR (Aug 30): WTK Holdings Bhd has returned to the black with a net profit of RM1.21 million for the second quarter ended June 30, 2018 (2QFY18), compared to a net loss of RM12.55 million in the same quarter last year, on higher contribution from the timber division.

This follows a 21.2% increase in revenue to RM206.82 million from RM172.04 million in 2QFY17, thanks to the plantation division.

In a filing with Bursa Malaysia today, WTK said the timber division rose 14.3% to RM166.4 million against RM145.6 million in 2QFY17 mainly contributed by higher sales revenue recorded by the logs and plywood segments by RM16.5 million and RM4 million, respectively.

Further, its plantation division grew 181.7% to RM23.1 million in 2QFY18 compared with RM8.2 million in the previous year due to its newly commissioned palm oil mill in July 2017, which derived its revenue from the sales of crude palm oil (CPO) and palm kernel (PK).

For the first half of the year, WTK posted a net profit of RM65.15 million against a net loss of RM16.13 million in the previous year, while revenue rose 2.2% to RM390.05 million from RM381.56 million.

On its prospects, WTK is of the view that with the current tight supply situation of plywood due to shortage of quality logs for production, it will fuel further price increase due to demand continuing to outstrip supply.

“This is expected to have a positive effect on the group’s plywood business.

At the same time, the group’s plantation division is expected to achieve higher fresh fruit bunch (FFB) production in view of the increasing mature palms hectarage coupled with higher age profile of palms.

However, the volatility of CPO price remains a challenge. With the expected full-year production of CPO and PK in 2018, the palm oil mill is expected to contribute positively to the group.

WTK expects challenges in its manufacturing and trading division to continue to be stiff from export markets, soft domestic market, increased substitute or alternative products and increased costs of production resulting from the continuous price increments for imported raw materials

WTK closed one sen or 0.83% up at 60 sen for a market capitalisation of RM288.87 million.