Daibochi Plastic And Packaging Industry's Q3 comprehensive income up 8.9% year-over-year to 7.5M Malaysian ringgit, attributable to increase in sales from packaging segment, sale of commercial land; revenue up 33% to 87.3M Malaysian ringgit

Elyse Blye

MELAKA, Malaysia , November 6, 2013 (press release) – The Board of Directors is pleased to submit its quarterly report on the consolidated results of the Group for the third quarter ended September 30, 2013. The figures have not been audited.

Review of Performance

The Group’s revenue for the quarter ended September 30, 2013 was RM87.29 million, an increase of RM21.64 million or 33% compared to the corresponding quarter in 2012. This is mainly attributable to the increase in sales to MNC customers, particularly the F&B sector from the packaging segment and the recognition of RM6.17 million from the sale of a piece of commercial land in the property segment. The Group’s quarterly revenue and PBT are record highs achieved to-date.

During the quarter, the packaging segment has set a new record in revenue of RM80.55 million, representing a substantial increase of 24% as compared to RM65.12 million for the corresponding quarter in 2012. This jump in top line was due to higher sales from existing customers as well as export contributions from new MNC customers in the F&B sector. The Group’s PBT of RM9.55 million for the current quarter from the packaging segment is the highest quarterly PBT achieved to-date.

The Group’s revenue for the nine months ended September 30, 2013 was higher by 12% as compared to last year’s corresponding period. The higher revenue enabled the Group to register a 10% growth in PBT.

The packaging segment recorded revenue of RM221.40 million for the nine months ended September 30, 2013, representing 9% increase as compared to RM202.90 million for the corresponding period in the previous year.

The PBT increased by 8% to RM26.69 million as compared to RM24.62 million previously due to the higher sales volume, favourable product mix and the continued focus on wastage control.

The revenue and PBT for the packaging segment for the nine months under review is a historical high for the Group.
There were no other material factors affecting the earnings and/or revenue of the Group for the current period.

Material Changes in Profit Before Tax for the Quarter Reported On As Compared with the Immediate Preceding Quarter

The factors leading to the Group’s strong performance in revenue and PBT for the current quarter have been mentioned in B1 above.

The export revenue from new customers as mentioned in the last quarterly announcement has materialised significantly in the quarter ended September 2013. This has helped to increase export revenue in the packaging segment from 37% to 44% in the current quarter.

Despite higher raw material costs in the current quarter the Group has registered record PBT of RM10.08 million.

Prospects

The ongoing construction of the Daibochi Films Complex will be completed by the fourth quarter of 2013. The film making machine is scheduled to arrive in mid-November 2013 and we expect the machine to be operational by early February 2014.

Prices of certain major raw materials have been on the uptrend since the second quarter of 2013, possibly due to rising crude oil prices. On August 28, 2013, crude oil price registered a recent high of USD112.24 per barrel. Prices of our major raw materials will face upward pressure should the crude oil price remain high at above the USD100 per barrel level. Although the Company has a cost pass-through mechanism for most of its customers, the continued high prices of raw materials has resulted in some margin squeeze as there is a time lag in the pricing mechanism.

Overall, the Group remains positive of its 2013 prospects and targets double digit growth in revenue and profit for 2013. The Board is optimistic that the Group is on track to achieve another record breaking year.

Industry Intelligence Editor's Note: In an omitted table, the company reported Q3 comprehensive income of 7.545 million Malaysian ringgit. For the same period a year ago, the company reported 6,928M Malaysian ringgit.

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