Scientex Packaging 2Q earnings up 14% as raw material, freight costs fall

KUALA LUMPUR (March 13): Plastic packaging producer Scientex Packaging (Ayer Keroh) Bhd, formerly known as Daibochi Bhd, saw its net profit rise 14% year-on-year for its second financial quarter ended Jan 31, 2023 (2QFY2023) thanks to softening of raw material prices, favourable product mix and lower freight cost.

The improved quarterly earnings were achieved despite headwinds such as increased electricity cost, staff costs and other operating expenses. Scientex Packaging (Ayer Keroh) is a 71.89%-owned subsidiary of Scientex Bhd.

Net profit for 2QFY2023 rose to RM13.38 million from RM11.69 million a year earlier. Earnings per share (EPS) rose to 3.82 sen from 3.57 sen during the period. This was also 9% higher than the RM12.28 million net profit posted in 1QFY2023.

However, revenue for 2QFY2023 grew by a marginal 1.8% to RM198.06 million from RM194.47 million in 2QFY2022.

In a filing with Bursa Malaysia on Monday (March 13), Scientex Packaging (Ayer Keroh) said sales from the domestic market contributed RM107.35 million or 54.2% of quarterly revenue, while exports made up the remaining RM90.71 million or 45.8%.

For the six-month period (1HFY2023), the group's net profit rose 19% to RM25.65 million from RM21.49 million a year earlier, while revenue grew 9.9% year-on-year to RM411.98 million from RM374.78 million.

On current financial year prospects, Scientex Packaging (Ayer Keroh) said its capacity expansion plan remains on track and is aimed at meeting customers’ needs with the capacity to scale up production, increasing production efficiency, developing innovative and value-added customised products that meet evolving market trends and addressing sustainable packaging requirements.

“The ongoing geopolitical uncertainties coupled with rising inflationary pressures continues to pose operational challenges to the group as consumer demand might be affected by the overall market sentiment,” it said.

In Myanmar, where the group has operations, Scientex Packaging (Ayer Keroh) said the socioeconomic conditions there continue to be challenging and foresees the situation remaining so for the short and medium term.

In the interim, the group added that it will continue to manage its operations to minimise any adverse effects whilst exploring options pertaining to its Myanmar operations.

“Barring any unforeseen circumstances, the group is cautiously optimistic to be able to sustain its performance for the financial year,” it said.

At noon market break, shares of Scientex Packaging (Ayer Keroh) ended up 13 sen or 5.5% at RM2.48, giving it a market capitalisation of RM870.9 million. Its share price has risen 10.7% year to date.