MSM committed to addressing cost pressures, focused on turnaround plan

TheEdge Wed, Jun 08, 2022 05:12pm - 1 year View Original


KUALA LUMPUR (June 8): MSM Malaysia Holdings Bhd said it is committed to its plan to overcome cost pressures, in view of higher raw sugar, natural gas and freight costs, coupled with the weak ringgit.

During a media briefing following the group’s 11th annual general meeting on Wednesday (June 8), MSM group chief executive officer Syed Feizal Syed Mohammad said the group has taken measures to mitigate the impact of the increase in production costs.

These include securing most of its wholesale requirement for the financial year ending Dec 31, 2022 (FY22), as well as its third party agreement access (TPA) with Petroliam Nasional Bhd (Petronas) for pay-per-use and Brent hedging.

“We may see bumps every now and then throughout the quarters, but we are not deterred by that. We are working towards overcoming those cost pressures, with some help from the government,” he said.

He added that the group, together with Central Sugars Refinery Sdn Bhd, has engaged with the Ministry of Domestic Trade and Consumer Affairs, Ministry of International Trade and Industry, Ministry of Finance and the Economic Planning Unit to revise the ceiling price of sugar.

The group has also engaged with others, including food and beverage players ranging from small SMEs to the majors, to get their feedback.

“So far, there has been positive support, but I can’t speak for the government. We might get some feedback from the government soon,” said Syed Feizal.

Asked if an increase in the sugar ceiling price would affect households amid the rising costs of living, he pointed out that the frequency of sugar consumption is not as high, compared to chicken or eggs.

For example, he said that a household would use up one kilogramme of sugar over a period of one to two months.

“If we assume a 50 sen increase per kilogramme, the impact would be spread over one to two months. In our view, it is not as impactful as other commodities or foods,” he said.

MSM posted a net loss of RM27.68 million for 1QFY22, compared to a net profit of RM31.19 million a year prior, despite a 16% year-on-year (y-o-y) quarterly revenue increase to RM595.92 million.

It expects the rising production costs to remain a challenge for the remainder of FY22.

For FY21, the group posted a pre-tax profit of RM81 million, on the back of RM2.3 billion in revenue. It resumed dividend payments with a distribution of three sen per share for the financial year.

At 4.26pm on Wednesday, MSM fell 1.5 sen or 1.9% to 79.5 sen, giving it a market capitalisation of RM558.87 million.

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