Muda Holdings sinks into red in Q2 on machinery upgrade costs

KUALA LUMPUR (August 24): Muda Holdings Bhd fell to a net loss of RM8.25 million for the second quarter ended June 30, 2022 (2QFY22), from a net profit of RM23.35 million a year earlier early, driven by the costs of a major planned machinery upgrade.

That translated to a loss per share of 2.71 sen versus earnings per share of 7.98 sen, according to the integrated stationery and corrugated box maker’s filing on Wednesday (August 24).

Quarterly revenue increased by 9.22% from RM399.77 million to RM436.61 million, driven by better selling prices across the group’s product range, namely recycled waste paper, industrial grade paper and paper packaging products.

However, the group’s benefits were weighed by the planned upgrade of major machines at Kajang―which was divided into two phases, namely “upgrade to machine” (Phase 1) and “testing and commissioning”. (Stage 2).

“Phase 1 of the upgrade was completed in June 2022 and is currently continuing with Phase 2. Phase 1 abnormal costs were RM14.1 million, which includes write-off of machines.

“Excluding the expected upgrade cost, the group is expected to record a pre-tax profit of RM7.1 million,” he added.

For the six-month period, Muda Holdings recorded a net profit of RM4.02 million, down 93.27% from RM59.77 million, while cumulative revenue increased by 10.72 % to RM902.1 million from RM814.78 million.

Going forward, Muda Holdings said it expects headwinds to continue as it expects its margins to be under pressure due to ongoing supply chain disruptions, raw material shortages and geopolitical uncertainties.

In addition to this, the group noted that the growing inflationary pressure resulting from higher electricity and natural gas tariffs, coupled with the new minimum wage policy in Malaysia, as well as the increase in the key rate in Bank Negara Malaysia’s day-to-day will lead to increased costs for its manufacturing operations. .

“In this difficult context, the group remains focused on sustainable growth for the rest of the year. Despite increased pressure on our results, the group will continue to focus on cost management, efficiency improvements and automation initiatives across our operations.

“Barring unforeseen circumstances, the group is confident that its performance will remain profitable for the year ended December 31, 2022 (fiscal year 22),” he added.

Shares of Muda Holdings closed six sen or 3.14% higher at RM1.97 on Wednesday, giving the group a market capitalization of RM600.95 million.

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