NTPM optimistic despite weaker 3Q as demand for tissue products surges amid Covid-19

TheEdge Fri, Mar 20, 2020 10:19pm - 4 years View Original


KUALA LUMPUR (March 20): While tissue paper manufacturer NTPM Holdings Bhd reported a 15% fall in net profit in its third quarter ended Jan 31, 2020 (3QFY2020), it is cautiously optimistic on its prospects as it sees a surge in demand for its tissue products, as hygiene awareness spikes amid the coronavirus pandemic.

"The recently-announced Movements Control Order for the period March 18-31 2020 will have an adverse impact on the operation of the group in Malaysia, as the affected companies in the group will only be allowed to continue to operate with 50% of its workforce.

"The positive news is the surge in demand for tissue products and wet tissue products, both in the domestic and export markets, since the onslaught of the Covid-19 pandemic. However, the group expects that, despite the reduction in the production of the affected companies in the group during this very challenging period, the group will still be able to cater to this surge in demand, given its existing stock and continuing operation in Vietnam," the group said in a stock exchange filing today.

The group also expects new users who have started to use our products to continue doing so, even after the Covid-19 pandemic has come to an end and as such, that there will be a sustained demand for the group’s products.

The group reported a net profit of RM3.07 million in its third quarter ended Jan 31, 2020 (3QFY20), down from RM3.66 million in the same period last year, on higher interest and income tax expenses. Revenue, however, increased marginally to RM197.67 million from RM195.53 million.

For the cumulative nine months period, the group's net profit sank 83% to RM2.22 million from RM13.81 million a year ago, despite revenue growing 6% to RM576.79 million from RM545.87 million.

It blamed the decrease in profit to the higher cost of goods sold, in particular the higher cost of virgin pulp and waste paper, which were purchased earlier at a higher rate. "Higher depreciation and finance cost have further reduced the profitability of the group," it added.

NTPM declared a first interim dividend of 0.8 sen per share in respect of its FY2020, payable on April 20.

NTMP shares closed 3.5 sen or 11.3% higher at 34.5 sen today, giving it a market capitalisation of RM387.45 million. The stock has fallen over 30% year-to-date, from when it was trading at 51 sen.

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