Ancom posts best-ever first-half result as net profit doubles, eyes further expansion

KUALA LUMPUR, Jan 17 — Leading regional agricultural and industrial chemicals manufacturer and supplier Ancom Berhad has reported its highest-ever results for the first half of its 2022 financial year (1HFY22) by doubling its net profit from the same period last year.

It reported a net profit of RM21.1 million for the period between June to November 30, 2021, over twice the net profit of RM9.2 million Ancom recorded during the first half of its 2021 financial year. Net profit refers to the profit after tax and non-controlling interest.

This is in line with Ancom’s increased revenue of RM937.6 million in the first half of the 2022 financial year, up sharply from the RM703.4 million recorded in the first half of the 2021 financial year (1HFY21).

“We are extremely delighted with a remarkable showing this first-half, which was our strongest six months results by a mile since the formation of Ancom,” Group CEO Lee Cheun Wei said in a statement.

“Given the net profit of RM21.1 million in 1HFY22, we are now only RM2.7 million shy of our full year net profit attained in the financial year ended May 31, 2021 (‘FY21’). With two more quarters to go and assuming no major hiccups, we are looking at a breakthrough year for FY22.”

For Ancom, its agricultural chemicals division recorded RM249.2 million in revenue and RM32.7 million in earnings before interest and tax in 1HFY22, which are both year-on-year improvements of 48.9 per cent and 18.8 per cent, respectively.

Commenting on Ancom’s agricultural chemicals division’s strong performance, Lee said that there was a marked increase in the sales of the public listed company’s agricultural chemical products due to favourable regulatory changes in the global herbicide market.

“The ban of a popular weedkiller called paraquat in countries like Thailand in recent years has created opportunities for close substitutes which Ancom produces. Besides that, we have also added a couple of new in-demand herbicide active ingredients (AIs) to our product catalogue,” he said.

The higher sales locally and abroad of the agricultural chemicals was also driven by the contributions from these new products by Ancom.

Ancom’s industrial chemicals division similarly also saw strong growth in its revenue with RM613.5 million recorded for 1HFY22 compared to RM454.6 million in the 1HFY21, which is a 34.9 per cent increase. This division’s earnings before interest and tax also grew to RM17.4 million or by 115.1 per cent over the same period.

Commenting on the key catalysts for Ancom’s industrial chemicals division’s growth, Lee said: “The easing of restrictions globally has increased economic activities and, in turn, elevated demand for industrial chemicals products. Concurrently, higher average crude oil prices during the period also worked to our advantage.”

Lee said that Ancom is set to grow even bigger this year through various expansion plans.

“We are on the verge of becoming one of the most integrated chemicals players through our ongoing consolidation exercise involving Nylex (Malaysia) Berhad. Besides, we are also expecting to complete the proposed acquisition of a livestock chemicals business. Both exercises are slated for completion by February 2022.

“On top of that, our new agrichem manufacturing plant in Klang is set to finish construction by June 2022 and will be ready for installation of new production lines for the new AIs in the second half of the year,” he said.

While acknowledging the challenges ahead with the prevailing global supply chain shock and elevated freight costs, Lee said Ancom believes it is capable of overcoming these obstacles as a market leader in the region.

“By and large, we are incredibly upbeat about the Group’s long-term prospects,” he said.

Ancom had today announced on Bursa Malaysia its financial results for its first half of the financial year and second quarter for the 2022 financial year for the period ended November 30, 2021.

For the second quarter for the 2022 financial year (2QFY22), Ancom’s revenue also increased by 31.7 per cent to RM532.9 million when compared against the previous quarter, while its net profit also increased by 33.6 per cent to RM12.1 million when compared against the previous quarter.

According to Ancom, one key factor for its improved quarterly performance was the lifting of restrictions after a movement control order ended, and which resulted in its industrial chemicals division recording a four-fold increase in earnings before interest and tax to RM13.9 million for 2QFY22 when compared against the previous quarter. Ancom’s agricultural chemicals division’s earnings before interest and tax was marginally higher at RM16.5 million for 2QFY22.

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