Kotra Industries 2Q hit by lower sales and higher costs, raises dividend to 12.5 sen

KUALA LUMPUR (Feb 21): Kotra Industries Bhd's net profit fell 29.22% in the second quarter ended Dec 31, 2023 (2QFY2024) to RM11.62 million from RM16.41 million due to lower sales and marginally higher costs incurred by the pharmaceutical and healthcare products manufacturer.

Quarterly earnings per share fell to 7.83 sen from 11.09 sen per share. The group, which owns the health supplement brand Appeton, saw revenue for the quarter fall 7.56% to RM57.55 million from RM62.25 million on weaker sales both locally and overseas.

Coupled with higher tax expense, the group’s net profit margin slipped to 20.18% from 26.36% in 2QFY2023 and 25.62% in 1QFY2024.

“The decline in profit before tax was mainly due to product mix and lower sales whereby certain expenses were relatively fixed in nature,” it said. On a net profit basis, it is the group's weakest quarter since the quarter ended January 31, 2021.

Kotra also pointed to high base value in the six months ended December 2022 (1HFY2023) due to abnormal demand locally amid major shortages of prescription items at the time. The situation has since normalised.

However, quarterly revenue rose 7.9% quarter-on-quarter from RM53.31 million as overseas sales rebounded more than the decline in local sales, although net profit was still down 14.96% q-o-q from RM13.66 million or 9.21 sen per share due to product mix and forex losses.

For 1HFY2024, Kotra's net profit fell 26.15% to RM25.28 million or 17.04 sen per share from RM34.65 million or 23.41 sen per share.

It nonetheless declared a 12.5 sen dividend per share for the quarter, up from 10 sen in 2QFY2023. It paid total dividends of 25.5 sen per share each in FY2022 and FY2023.

Half-year revenue similarly fell 12.71% to RM110.86 million from RM127 million. The fourth quarter revenue represented 51.9% of the revenue in 1H.

On prospects, Kotra pointed to potentially higher costs due to weaker ringgit and inflationary pressures. This could also weaken consumer purchasing power and impact sales, it said.

That said, it sees continued profitability amid sustained product demand, adding it will monitor its strategic plans moving forward.

Shares of Kotra Industries rose four sen or 0.82% to RM4.92, giving it a market capitalisation of RM729.7 million. The counter is up just 1.86% this year.