KUALA LUMPUR: Samchem Holdings Bhd's net profit fell 48 per cent to RM6.50 million in the third quarter (Q3) ended September 30, 2022, from RM12.61 million a year ago.

The lower earnings stemmed from higher costs and loitering business activities faced by customers due to uncertainty.

However, the integrated chemicals and lubricants distributor said revenue rose 16 per cent to RM317.32 million in Q3 2022 compared to RM272.81 million achieved in the same quarter last year due to higher volume and higher average selling prices.

For the first nine months ended September 30, 2022, the company's revenue increased by 8 per cent to RM1.05 billion, and the net profit was RM44.29 million.

Chief executive officer Ng Thin Poh said unfavourable macro conditions such as interest hikes, inflationary pressure, higher input costs, logistic disruption and zero-Covid policy from China posed significant challenges in Q3 2022.

Ng said the company views the setback in chemical demand as temporary as the market adjusts to the new economic benchmark, rationalizing product prices and normalizing inventory levels.

"Despite various challenges, we remained profitable and maintained strong financial resilience.

"This allowed us to continue rewarding our shareholders with dividends, and we declared a third interim dividend of 0.6 sen per share, representing a payout ratio of 50 per cent," he said.

Moving forward, Ng said the company remains confident of its prospects and continues to invest in long-term growth as chemicals are indispensable to many industries.

Moreover, he said Southeast Asia is becoming a more prominent manufacturing hub as an alternative to China.

"Samchem is scheduled to complete its Pulau Indah and Vietnam expansions by the end of this year, increasing our total warehousing capacity by 38 per cent and 58 per cent in Malaysia and Vietnam, respectively.

"This will enable us to move into 2023 with the readiness to expand into new segments and enhance our product portfolio.

"Our expansion strategies coupled with long-term focuses on operational excellence will drive future performance and market penetration", he added.