Kawan Food's net profit down 9.5% dragged by higher selling and operation expenses

KUALA LUMPUR (Feb 22): Kawan Food Bhd’s net profit fell 9.5% in the fourth quarter ended Dec 31, 2022 (FY22) to RM8.66 million, from RM9.56 million despite higher revenue, dragged by higher selling and distribution expenses incurred in the quarter.

Selling and distribution expenses surged 57.23% to RM14.91 million from RM9.48 million, the group’s filing showed. However a 26.36% decline in administration expenses to RM5.4 million helped to cushion the quarterly earnings contraction.

Quarterly revenue, however, increased by 7.39% to RM72.36 million from RM67.38 million. The homegrown frozen food manufacturer said the increase in sales was mainly contributed by the local market due to the festive season in the fourth quarter last year and customers stocking up in preparation for the Chinese New Year celebrations.

As a result, earnings per share dropped to 2.39 sen per share, from 2.66 sen. It declared a single tier interim dividend of 3.6 sen per share.

Nonetheless, Kawan Food posted a higher annual profit of RM38.5 million in FY2022, 21.12% higher compared with RM31.79 million a year ago, as annual revenue expanded 16.47% to RM293.23 million from RM251.77 million

Moving forward, Kawan Food said it has obtained approval for hiring foreign workers and is in the midst of arranging for the workforce on-boarding. This will enable the group to increase production capacity.

Meanwhile, it said while the global market outlook shows signs of recession, the group foresees the Malaysian economy sustaining its momentum in domestic demand on the back of various policies' support and continued recovery in the tourism-related sub-sector.

“The group will strive to remain competitive and seek opportunities to grow its business despite challenges in production costs as inflation remains high on continued supply-chain disruptions,” it noted.

It continues to improve operational efficiencies and cost optimization with the implementation of Industry 4.0 in strategic phases, it concluded.

Kawan Food’s share price closed unchanged at RM2.22 on Wednesday, giving the group a market capitalisation of RM805 million.