KUALA LUMPUR: Techbond Group Bhd posted a lower revenue of RM15.3 million in first quarter (Q1) financial results ended 30 September 2021 (FY22) from RM22.0 million posted in the same quarter last year.

This was mainly attributed to lower demand from both Vietnam and Malaysia markets as a result of lockdown imposed in the respective countries.

Net profit stood at RM1.3 million versus RM2.5 million in 1Q FY21.

This was primarily due to lower revenue recorded stemming from the aforementioned factors, which resulted in lower economies of scale.

Techbond's balance sheet continued to be lean and healthy as it remained in a net cash position, with net cash per share of 6.5 sen as of 30 September 2021, backed by net assets of 28 sen per share.

Industrial adhesives and sealants remained the company's revenue contributor, accounting for 95.9 per cent or RM14.7 million to total turnover in Q1.

Managing director Lee Seng Thye said against the backdrop of a very demanding business operating landscape stemming from the Full Movement Control Order (FMCO) and lockdown imposed in Malaysia and Vietnam impacted earnings for Q1.

"Nevertheless, we continue to be positive on our prospects, which will be further elevated by the uptick in economic activities following the reopening of the economy in Malaysia and the lifting of the lockdown in Vietnam.

"On the other hand, our operations in Malaysia have been running at optimal capacity since early September 2021 after

receiving approval from the authority.

"Over in Vietnam, the company's production has been operating with the full workforce and capacity as well since mid-October 2021.

"Prior to this, our Malaysia and Vietnam operations were running at reduced capacity in accordance with the guidelines enforced," he said in a statement today.

Lee said the company have also started utilising in-house manufactured polymer from the new upstream polymerization plant in Vietnam to produce industrial adhesives.

Currently, the plant is running at approximately 30 per cent capacity, which is fully allocated for our internal use.

"This would provide us cost savings and with the tax incentives enjoyed in Vietnam, it would boost our bottom-line going forward.

"Another 40 per cent of the capacity will be used to develop new types of industrial adhesives with the remaining 30 per cent allocated to be sold to external customers," Lee said.

Touching on the demand outlook, Lee said the orders from customers are robust from both the domestic and overseas markets.

"Following the lifting of the Covid-19 restrictions in Malaysia and Vietnam, we anticipate pent-up demand from the woodworking, paper and packaging and other industries, which we have already started receiving sales orders.

"Besides, we also expect to make further progress in our efforts to expand our distribution network to more countries and simultaneously, enhancing presence in existing countries following the reopening of international borders.

"All in all, the outlook of Techbond remains promising underpinned by the abovementioned factors backed by our strong balance sheet and prudent management," Lee further said.