KUALA LUMPUR (May 24): The normalisation of container freight rates is taking a bite out of total logistics service provider FM Global Logistics Holdings Bhd's profits, as seen in its latest results for its third financial quarter ended March 31, 2023 (3QFY2023).

The group saw its net profit for the quarter fall 9.5% to RM10.78 million from RM11.91 million a year earlier on lower revenue. As a result, earnings per share was lower at 1.93 sen in 3QFY2023 compared with 2.13 sen in 3QFY2022.

In a filing with Bursa Malaysia on Wednesday (May 24), FM Global said revenue for 3QFY2023 fell 37.7% to RM202.06 million from RM324.58 million a year earlier, mainly due to lower freight rates and lower activities in international freight services in the current quarter. This is despite an increase of activities in the domestic logistics services.

Nevertheless, FM Global declared a second interim dividend of one sen per share for the financial year ending June 30, 2023 (FY2023), payable on July 28.

For the cumulative nine-month period (9MFY2023), FM Global managed to post a 3.8% increase in net profit to RM34.27 million from RM33.02 million a year earlier, despite revenue falling 8.3% to RM750.92 million from RM819.14 million in 9MFY2022.

FM Global said its current full year performance is expected to be close to the previous year performance in view of the challenges such as global inflationary pressure ahead and the potential risks caused by the uncertain global economic situation. It posted a record net profit of RM45.59 million on a revenue of RM1.15 billion in FY2022.

"The group will continue to focus on expanding its customer base regionally and improve cost management via operational efficiencies," it added.

According to maritime analyst Drewry, the latest Drewry World Container composite index of US$1,719 (RM7,856) per 40-foot container as at May 18 is now 83% below the peak of US$10,377 reached in September 2021. It is 36% lower than the 10-year average of US$2,688, indicating a return to more normal prices, but remains 21% higher than average 2019 (pre-pandemic) rates of US$1,420.

At 3.07pm on Wednesday, FM Global shares were unchanged at 58 sen, with 14,700 shares changing hands. Its market capitalisation stood at RM326.74 million.