KUALA LUMPUR (Feb 23): Hong Leong Industries Bhd saw its net profit fall 26.4% year-on-year to RM73.78 million in the second quarter ended Dec 31, 2021 (2QFY22) from RM100.24 million a year ago due to rising material costs coupled with higher reversal of inventory provision in the previous corresponding period.

Consequently, earnings per share were lower at 23.47 sen from 31.9 sen.

Revenue for the period was mostly unchanged at RM777.07 million compared with RM770.68 million a year ago.

In a bourse filing on Wednesday, the group said the higher material costs led to a slight reduction in margins for motorcycle products.

Hong Leong Industries is involved in the manufacture and sale of motorcycles, spare parts and ceramic tiles.

On a sequential basis, the group posted over a 100-fold increase in net profit to RM73.78 million compared with RM662,000 in the immediate preceding quarter, driven by higher revenue from the resumption of manufacturing operations.

Revenue surged 181.53% quarter-on-quarter to RM777.07 million from RM277 million, the group's filing with the local bourse showed.

For the cumulative six months ended Dec 31, 2021, Hong Leong Industries' net profit dropped 50.69% to RM74.43 million from RM150.96 million a year earlier. Meanwhile, revenue fell 25.94% to RM1.05 billion from RM1.42 billion.

The group said the lower results for the six-month period were mainly due to lower sales across all product segments because of the Movement Control Order, which resulted in curtailment of production for two months.

On its prospects, it said that the Covid-19 pandemic and supply chain disruptions remain as key concerns that may continue to impact the group's production, but it will continue to manage costs and develop new products.

Going forward, the group expects a satisfactory performance for FY22.

Hong Leong Industries closed 16 sen or 1.68% higher at RM9.70 with some 145,800 shares changing hands. At RM9.70, the company is valued at RM3.18 billion.