Muda Holdings slips into the red in 2Q22

Despite the drop, the paper mill company’s revenue for the quarter increases by 9.22% to RM436.61m

by S BIRRUNTHA / pic source

MUDA Holdings Bhd posted a net loss of RM8.25 million for the second quarter ended June 30, 2022 (2Q22), against a net profit of RM23.35 million a year ago, dragged by increase in energy cost as well as costs of a planned major machinery upgrade.

In a filing to Bursa Malaysia, the paper mill company said its earnings were further hampered by lesser contribution from its associated company and higher interest cost recorded in 2Q22.

Revenue for the quarter, however, rose 9.22% to RM436.61 million from RM399.77 million previously, due to better selling prices across the group’s range of products ― namely recycle waste paper, industry grade paper and paper packaging products.

As a result, the company registered a loss per share of 2.71 sen for the period from an earnings per share of 7.98 sen in 2Q21.

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

The company noted that the increase in cumulative revenue was mainly attributable to higher average selling price of industrial grade paper and paper packaging products by 15.1% and 9.4%, respectively.

Looking ahead, Muda Holdings said some headwinds are expected to remain with the ongoing disruptions in supply chain, raw materials shortages and geopolitical uncertainties continuing to put pressure on the company’s margin.

Additionally, it said rising inflationary pressure resulting from higher electricity and natural gas tariffs, coupled with the recent implementation of new minimum wage policy in Malaysia and the hike on overnight prescribed interest rate as announced by Bank Negara Malaysia will result in higher costs to the company’s manufacturing operations.

“Against this challenging backdrop, the company remains focused on driving sustainable growth in the remainder of the year.  

“Despite increased pressure on our bottom line, the company will continue to emphasise on cost management, efficiency improvement and automation initiatives across our operations,” it added.

Barring any unforeseen circumstances, Muda Holdings is positive that its performance will remain profitable for the financial year ending Dec 31, 2022.

Muda Holdings’ share price closed six sen or 3.14% higher at RM1.97 yesterday, giving it a market capitalisation of RM600.95 million.