KUALA LUMPUR (Feb 27): Kim Teck Cheong Consolidated Bhd's (KTC) net profit surged 33.7 times to RM2.63 million in the second financial quarter ended Dec 31, 2018 (2QFY19) from RM78,000 a year ago, due to a surge in demand for fast moving inventories and better profit margins.

This resulted in higher earnings per share of 0.52 sen for 2QFY19 compared with 0.01 sen for 2QFY18.

Quarterly revenue also rose 60.2% to RM150.3 million from RM93.8 million a year ago, on increased contribution from its operations in Sabah and Sarawak, thanks to the Christmas and Chinese New Year festivals.

In a filing with Bursa Malaysia today, KTC also attributed the better quarterly revenue to increased contribution from its operations in Labuan and Brunei due to a surge in demand for consumer packaged products.

For 2QFY19, KTC's gearing ratio fell to 1.78 times from 2.34 times.

For the cumulative six months (1HFY19), the group's net profit jumped 23.6 times to RM4.79 million from RM203,000 a year ago, while revenue increased 51.8% to RM304.09 million from RM200.36 million in 1HFY18.

On prospects for the financial year ending June 30, 2019 (FY19), KTC said it is optimistic of the distribution business segment and expects it will be satisfactory and continue to be the major contributor in terms of revenue and profits to the group.

"The abolishment of the goods and services tax and the reintroduction of the sales and service tax bodes well for the group as consumer spending is likely to rise, which is expected to increase sales.

"The group is striving to serve its existing customers better by maintaining high service standards while offering innovative service offerings, and at the same time attracting new agencies to complement the group's highly diversified agencies portfolio," it added.

In a separate statement, KTC said its cash flow from operations has improved from a negative cash flow of RM25.26 million to RM11.75 million.

"This was due to continued improvement in working capital cycle such as inventory turnover period from 93 days to 70 days and trade receivables turnover from 83 days to 68 days compared with FY18," it added.

KTC shares ended the morning session up 1.5 sen or 8.82% at 18.5 sen today, with 4.51 million shares done, bringing a market capitalisation of RM97.18 million.