MSM records loss after tax of RM73 million for 3QFY22
KUCHING: MSM Malaysia Holdings Berhad (MSM) recorded loss after tax (LAT) of RM73 million for the third quarter (3Q) of the financial year ending December 2022 (FY22), compared to profit after tax (PAT) of RM97 million for 3QFY21 as a result of higher production costs outweighing the increase in average selling price.
Included in the loss for the quarter are certain accounting provisions on operational matters of RM46 million that can potentially be reversed with improved parameters recorded.
Revenue for the third quarter was 22 per cent higher at RM668 million versus RM549 million for the corresponding quarter last year, while for 9MFY22 was recorded at RM1.88 billion, a significant improvement of 17 per cent rise from RM1.61 billion in the same period last year.
The increase in revenue for 9M2022 are attributable to the increase in Average Selling Price (ASP) for refined sugar for Wholesale, Industry and Export segment, driven by higher NY11 and increase in export premium.
The newly increased ASPs will eventually improve performance but for 3Q the Group’s overall financial performance sustained high production input costs. The loss was also contributed by lower production in MSM Sugar Refinery (Johor) Sdn Bhd (MSM Johor) overall of which improvement programmes related to the ramp-up are in good progress.
The net operational loss is mainly due to the 18 percent higher production cost in the period owing to 14 per cent higher NY11, 5 per cent higher freight cost, 6 per cent higher US dollar-ringgit rate and 59 per cent higher gas rate.
“The group continues to face prevailing challenging environment amidst high input costs mainly raw sugar, freight, natural gas and weakening of Ringgit Malaysia. Other input costs such as packaging materials, wages and inland logistics have also increased significantly.
“In addition, margins are compressed in the consumer segment under gazetted controlled selling prices. The prolonged unchanged controlled price has led Malaysia to be the cheapest nation in retailed sugar prices in Asia Pacific at RM2.85/ kg.
“As example, Thailand is over RM3.40/kg, Indonesia over RM4.40/kg and Philippines over RM6.00/kg. As a joint sugar industry player we have highlighted to the government the need for the long delated price adjustments,” said MSM group chief executive officer, Syed Feizal Syed Mohammad.
The domestic and export markets are seeing stronger demands which provide growth opportunities and recovery of product consumption including sugar across Consumer and Industrial segments.
MSM remains focused in meeting these demands by improving operations particularly to ensure MSM Johor reaches a stable operation to attain lower refining cost with higher efficiency.
Progressively, MSM Johor ramp up programme is on track for completion with two boilers early next year as compared to one boiler presently. The business interruptions in MSM Johor previously, will potentially be mitigated with the related cover of insurance.
“MSM will ensure consistent supply of sugar is made available to the market. We continue to engage the Government for all necessary economic support, especially the impending sugar price revision in ensuring food security despite the challenges,” Syed Feizal further added.
MSM Group remains focused to ramp up its production, increase yield, further reduce unit cost and mitigate loss. One of the initiatives identified is to embark into alternative energy such as solar to reduce electricity usage and targeted to commence in 2023 with MSM Prai Berhad and MSM Sungai Buloh Warehouse.
MSM will continue to pursue sustainable growth with an enhanced Environmental, Social and Governance (ESG) framework within MSM Group through a wide range of ongoing and new initiatives.