KUALA LUMPUR, Jan 27 — Malaysian agricultural and industrial chemicals manufacturer and supplier Ancom Berhad recorded nearly 400 per cent increase in its net profit for its first half year period, which ended on November 30 last year.
The group garnered a profit after tax and non-controlling interest of RM9.3 million, which is a 377.3 per cent increase year-on-year (YoY) compared to the RM1.9 million reported for the same period in the year before.
Its group chief executive officer Lee Cheun Wei attributed the growth to strong sales from Ancom's agricultural chemicals division, coupled with higher profit margin attained from the industrial chemicals division.
He also said improvements to cost efficiency further enhanced Ancom's bottomline.
“Having overcome many challenges from multiple fronts in the past financial year, we hope that the worst is over.
“After a fantastic start into the financial year, we are extremely delighted to have sustained the turnaround momentum in the second quarter with a 393.6 per cent jump in the bottom line, which was followed by an earlier 347.4 per cent YoY increase in the first half's net profits,” he said in a statement today.
Lee added that Ancom experienced a significant improvement to its agricultural chemicals division, mainly attributed to better weather conditions, particularly in the United States.
“Extreme weather in the past had affected the crops of some of our key clients, causing built-up in pesticides inventory. That is behind us now, and inventory levels have begun to normalise with order replenishment returning to normalcy as well.
“The Group is currently expanding the production capacity of its agricultural chemicals to capitalize on the growth in the global market. We are building a new 70,000 square feet facility on the land adjacent to our existing facility in Klang,” he said.
Lee said Ancom's plan is to produce four more new active ingredients, doubling from the current four it already produces, with a target of commencing operations of some of these new active ingredients at the new facility towards the later part of the year.
“Meanwhile our industrial chemicals segment has made a meaningful turnaround in performance as well. Despite lower revenue in the first half, the division has seen its profit grew substantially thanks to the recovery in commodity prices, particularly crude oil price, and this has contributed to the higher profit margins achieved.
“Looking ahead, we expect our growth momentum to prevail. With mass immunization exercise beginning to take place worldwide, the global economy looks set to recover gradually. This augurs well for our businesses,” he said.
Ancom will simultaneously carry on with its initiatives to streamline and improve operational efficiency, which the chief executive officer said will enable the group to reap the combined benefits of both forces, externally in the form of a macro-recovery and internally in the form of greater efficiency.
For the cumulative six-month period which ended on November 30, Ancom’s revenue decreased by 12.3 per cent YoY or RM99.0 million to RM703.4 million from RM802.3 million in the first half of 2020.
This was due to the 20.2 per cent YoY decline in turnover from industrial chemicals division to RM454.6 million, which offset the 39.5 per cent YoY increase in revenue from agricultural chemicals.
Agricultural and industrial chemicals continued to be the group’s anchor revenue driver, having contributed 88.4 per cent to total turnover for the period under review.
Notwithstanding the lower revenue, the industrial chemicals segment’s operating
profit surged by 200.3 per cent YoY from RM2.7 million in the first half of 2020 to RM8.1 million in the present first half.
Similarly, operating profit for agricultural chemicals business jumped 40.7 per cent YoY to RM27.5 million in the present first half, from RM19.5 million a year ago.
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