KUALA LUMPUR (Dec 13): SCGM Bhd saw its net profit fall 68.6% to RM1.65 million for the second financial quarter ended Oct 31, 2018 (2QFY19) from RM5.26 million a year ago, due to higher resin prices, finance cost, as well as increased operating expenditure incurred by both its old and new plants in Johor during the current quarter under review.

This resulted in a lower earnings per share of 0.86 sen for 2QFY19 compared with 2.74 sen for 2QFY18.

Quarterly revenue, however, was up 10.2% to RM57.43 million from RM52.11 million a year ago on higher local sales demand for plastic packaging products.

The thermoform food packaging manufacturer also declared a second interim dividend of 0.5 sen per share for the financial year ending April 30, 2019 (FY19), payable on Jan 18, 2019.

This will bring total dividend payout year-to-date to RM1.9 million, which is 71% of the group’s net profit for 1HFY19.

For the cumulative six months (1HFY19), SCGM posted a 75% decline in net profit to RM2.71 million from RM10.85 million a year ago, while revenue climbed 7.1% to RM113.23 million from RM105.77 in 1HFY18.

On prospects, SCGM said the sales of food and beverage (F&B) plastic packaging continued to dominate the group's top line, accounting for almost 80% of its total sales for 1HFY19.

"This is in line with the plastic packaging still being the viable alternative for F&B applications in view of its cost-efficiency, functionality and versatility.

"Worldwide, the F&B sector has experienced healthy growth in the last decade and this is expected to continue, in light of the growing world population and increasing demand for home delivery and fast foods due to changes in consumers’ demographic factors, eating habits along with busy schedule for working class," it added.

SCGM said going forward, it will focus its sales efforts in developing more marketing strategies to increase its sales of F&B packaging locally and globally.

In a separate statement today, its managing director Datuk Seri Lee Hock Chai said the group is keeping an eye on raw material prices, which were higher in the past six months but are moderating this month in line with crude oil prices.

"This strengthens our resolve to hasten the commencement of our new factory, as the greater production volume would enhance our economies of scale and overall competitiveness in local and regional markets.”

SCGM also noted that the relocation of the group’s main operations to its new headquarters is currently midway, which is targeted to operate in the third quarter of FY19.

"The group will strive to achieve better financial performance in the coming financial quarters when the new Kulai plant is commissioned," it added.

SCGM shares closed 4 sen or 3.25% higher at RM1.27 today, with 36,200 shares done, bringing a market capitalisation of RM244.81 million.