KUALA LUMPUR (Dec 2): Daibochi Bhd posted net profit of RM10.98 million in its first quarter ended Oct 31, 2019, on the back of higher domestic sales, mainly driven by increased deliveries to a key multinational corporation (MNC).

In a bourse filing today, Daibochi said revenue for the quarter came in at RM152.56 million.

Earnings per share stood at 3.35 sen.

There were no year-on-year comparable figures, as the group had changed its financial year end last year from Dec 31 to July 31.

Reviewing its performance, Daibochi said exports as a percentage of group revenue dipped to 52.9% compared to 55.5% previously, mainly due to lower shipments of RM4.59 million to the Philippines market, owing to the country's excise tax on sugar-sweetened beverages which was not present in the previous corresponding quarter.

It said contribution from the Malaysia plant grew 3.2% to RM101.94 million from RM98.82 million in the previous corresponding quarter.

Daibochi said due to a one-off merger and acquisition (M&A) related transaction cost of RM4.86 million, the group recognised a loss of RM600,000 in the quarter under review.

It said excluding this one-off cost, its profit before tax decreased 61.9% from RM11.18 million in the previous corresponding quarter to RM4.26 million, mainly due to higher raw materials cost, particularly for polyester film, the sales mix, and increased operating expenses, especially for bonus accrual, labour and electricity.

Daibochi said it also recognised higher foreign currency exchange (forex) loss of RM407,000 in the current quarter compared to a forex loss of RM83,000 in the previous corresponding quarter.

On its prospects, Daiboichi said it is optimistic on delivering commendable performance in the financial year ending July 31, 2020 (FY20) on sustained growth in demand for flexible plastic packaging from the resilient food and beverage, and fast moving consumer goods sectors in Malaysia, and its export markets comprising the Southeast Asian region and Australia.

"We also look forward to easing key raw materials costs in FY20 in line with lower crude oil prices.

"Additionally, we are also hopeful of stabilization of the ringgit and Myanmar Kyat against the US dollar in FY20, which would result in reduced forex losses and potentially increased sales in Myanmar," it said.

Daibochi, which became an associate of Scientex Bhd in February this year, said Scientex's complementary product portfolio is also expected to boost its value proposition to new customers, specifically to MNCs looking for a reliable flexible packaging partner capable of delivering high quality and sustainable solutions.

"The combination of Daibochi and Scientex will create a truly world-class plastics converting player that will be the impetus to hasten the development of Malaysia's plastics industry, and enabling it to compete effectively on the global stage," it said.

At the midday break today, Daibochi shares rose 4.39% or 10 sen to RM2.38, valuing it at RM780.39 million.