Perstima positive 1Q performance sustainable to full year

The firm posts a threefold increase YoY in net profit due to higher profit margins despite marginal change in sales volume


Tinplate maker Perusahaan Sadur Timah Malaysia Bhd (Perstima) is cautiously optimistic that the measures to control costs and improve efficiency will enable it to post a profitable year despite challenging market conditions.

The company posted a three-fold increase year-on-year (YoY) in net profit to RM12.14 million for first quarter ended June 30, 2018 (1Q18), due to higher profit margins despite marginal change in sales volume YoY.

“2017 was a tough year due to the aggressive competitions in both the local market and global market. Nonetheless, with the positive result we acquired from 1Q18, we are upbeat for the remaining of 2018,” Perstima chairman Datuk Gooi Hoe Soon (picture) said after the group’s AGM in Kuala Lumpur yesterday.

He added that the group remains optimistic despite a lack of pricing power and demand for its products becoming very cautious.

“That said, customers have started to accept the condition of industry as a whole,” he said, adding that the group will need to be careful with cost controls and production efficiency.

Gooi said Perstima is looking into averaging its fixed costs as well as to increase production efficiency of its plants in Malaysia and Vietnam.

Currently, the group’s Malaysian facility is at 80% utilisation capacity, while Vietnam is at 60%.

With regard to competition especially from the Chinese market, Perstima will not reduce its labour cost but will increase and push for production efficiency.

“We could adjust and cut our labour cost, but we are making the effort to reduce our production cost while improving the efficiency of our production,” he said.

He added that Perstima has the advantage of offering premium quality tinplate that is suitable for tin food packaging.

“Even though our prices may be higher than China’s, we have the premium quality which gives us the bigger advantage,” he said.

In addition, about 80% to 90% of Perstima’s customers are local, while the remaining are for export.

Perstima’s revenue for financial year ended March 31, 2018 (FY18), amounted to RM939.9 million versus RM840.7 million in FY17.

Net profit for FY18 amounted to RM21.5 million or earnings per share (EPS) of 22.79 sen versus a net profit of RM55.1 million or EPS of 55.5 sen in FY17.