KUALA LUMPUR (May 31): Metrod Holdings Bhd's net profit slipped 17% to RM5.11 million in its first quarter ended March 31, 2017 (1QFY17), from RM6.19 million a year ago, despite higher revenue, as taxation rose.

Taxation grew 2.5 times to RM1.53 million, from RM615,000 last year (1QFY16), as deferred tax jumped to RM1.28 million, from RM252,000, its Bursa Malaysia filing today showed.

Revenue grew 23% year-on-year to RM556.1 million, from RM452.08 million, thanks to higher copper prices and a favourable exchange rate, it said.

Profit before tax in the quarter gained 6% y-o-y to RM7.49 million, from RM7.09 million, due to higher gain from the group’s investment in Compulsory Convertible Debentures (CCDs) of a subsidiary, and a fair value gain on foreign exchange derivatives.

"Demand for copper products in Malaysia and export markets during the current quarter remained steady. [However], competition arising from over capacity remained intense,” Metrod said.

Meanwhile, it said performance of its hotel operations in the quarter was satisfactory, despite low occupancy rates, because of higher room rates, higher foreign tourist arrivals and cost savings.

Going forward, the group expects exports to be affected by weak oil prices, a weak ringgit, uncertainty in global markets and demonetisation in India.

“Credit, commercial and security risks are expected to remain high, due to volatile copper prices and currency. Margins are under significant pressure. [But] the group is able to manage the copper and exchange exposure, due to its hedging policies,” Metrod said.

As for outlook for its hotel operations, it is positive for 2017 due to improvement in domestic leisure travel and foreign tourist arrivals, and as the Indian government promotes inbound tourism by relaxing visa rules and simplifying the tax structure.

"The board expects the performance of the group for FY17 to be satisfactory," it added.

Shares in Metrod closed unchanged at RM1.77 per share today. It had a market capitalisation of RM212.40 million.