Samchem’s 1Q net profit weighed down by lower sales volumes, margins

KUALA LUMPUR (May 15): Samchem Holdings Bhd’s net profit tumbled 66.64% year-on-year (y-o-y) to RM6.54 million or 1.2 sen per share for the first quarter ended March 31, 2023 (1QFY2023), against RM19.59 million or 3.6 sen per share a year ago, weighed down by lower sales volumes and margins.

The integrated chemicals and lubricants distributor registered a lower revenue of RM255.39 million — down 29.94% y-o-y — from RM364.51 million in 1QFY2022, amid decrease in average selling price and sales volume, according to its filing on Monday (May 15).

On quarter-to-quarter basis, the group managed to return to profitability versus a net loss of RM2.13 million in 4QFY2022 — due to improvement in gross profit margin, gains in disposal of property and equipment, foreign exchange (forex) gains and improvements in operational efficiency — despite revenue falling 7% from RM273.31 million.

Samchem’s performance is driven by the demand and supply for chemicals in the market, regional consumption and economic conditions, and can be affected by exchange rate fluctuations, competition and disruptions to demand and supply.

Samchem’s executive chairman Ng Thin Poh noted that the chemicals industry encountered challenges in recent months, driven by lingering concerns of a potential recession and a slower-than-anticipated demand uplift, which has led to cautious inventory strategies adopted by the group’s customers.

“Our Malaysian operations have displayed exceptional resilience throughout this period, demonstrating volume growth from the previous quarter,” Ng said in a separate statement.

“The commencement of operations at our new warehouse in Pulau Indah this month is timely, and we are excited about the opportunities it presents to further enhance our presence and solidify our foothold in Malaysia. With more than three decades of track record, we are confident of our ability to navigate the evolving market landscape and drive continued success for Samchem,” he added.

Samchem’s share price, which has fallen 18.38% year-to-date, finished at 55.5 sen on Monday. This gives the group a market capitalisation of RM299.22 million.