KUCHING: WTK Holdings Bhd has made a major turnaround in its financial performance, chalking up group net profit of about RM24.5 million in second quarter to June 30, 2022 (Q22022) from loss of RM1.2 million in Q22021 on expanded revenue.
Group turnover rose to RM132.7 million from RM107.9 million previously or an increase of RM24.8 million or 23 per cent.
This boosted company’s earnings per share to 5.22 sen from loss of 0.25 sen previously.
In the current quarter under review, the plantation segment was the top contributor to group revenue, generating RM59.2 million (Q22021: RM38.4 million) while the timber segment chipped in with RM50.5 million (RM56.9 million).
The tapes segment posted higher revenue of RM16.7 million (RM12.5 million) while the new foods segment contributed RM5.97 million (zero).
The plantation segment recorded pre-tax profit of RM15 million (RM5.87 million), foods segment RM14.4 million (zero) and tapes segment RM1.61 million (RM1.1 million).
The timber segment managed to narrow its pre-tax loss to RM4.2 million (-RM7.36 million).
“The group recorded a profit before tax of RM26.8 million in 2Q2022 as opposed to 2Q2021’s loss before tax of RM0.8 million, mainly attributed to reduced loss from the timber segment, higher profit from the plantation segment and the on-off gain from bargain purchase of Sing Chew Cold Storage Sdn Bhd (SCC) recognised by the foods segment,” WTK said in explanatory notes to its financial results.
WTK’s wholly-owned subsidiary Kuching Plywood Bhd acquired SCC from TMC Importer & Exporter Sdn Bhd (in liquidation) for RM20 million cash on June 15, 2022.
As the fair value of the acquired assets is higher than the cash paid for the acquisition, a gain from bargain purchase of RM14.3 million was therefore recognised in the current quarter under review.
WTK attributed the RM20.8 million revenue increase in the plantation segment quarter-on-quarter to increased production and higher realised crude palm oil (CPO) price as compared to Q22021.
It said the improved performance of the tapes segment was mainly due to the recovery in demand of tapes and related products.
The group is involved in the manufacture and sales of adhesive and gummed tapes and trading of tapes, foil, papers and electrostatic discharge products.
The Q22022 financial results were also a marked improvement from immediate preceding quarter (Q12022) when WTK recorded pre-tax profit of RM708,000 (Q22022:RM26.8 million) on revenue of RM104.2 million (RM132.7 million).
In Q22022, the timber segment generated higher revenue of RM50.5 million (Q12022:RM44.5 million) as a result of higher average selling prices of timber products and increase in export sales of plywood products.
The improvement performance of the plantation segment was due to higher production of fresh fruit bunches (FFB) in the current quarter.
Over a six-month period in 2022 (6m2022), WTK posted group net profit of RM23 million, a reversal from loss of RM13.6 million in 6m2021 as revenue jumped to RM236.8 million from RM194.4 million.
In 6m2022, the plantation segment contributed RM102.8 million to group turnover (6m2021:RM63.3 million) and pre-tax profit of RM21 million (RM2.36 million) while the tapes segment generated revenue of RM32.5 million (RM33.4 million) and pre-tax profit of RM2.96 million (RM3.57 million).
The timber segment registered revenue of RM95 million (RM97.2 million) and reduced its pre-tax loss to RM10.5 million (-RM18.3 million).
Commenting on prospects, WTK said its timber business is facing the challenges of declining natural logs and stricter operational requirements arising from timber certification.
“Thus, the group is taking cautious view over the outlook of timber business for the financial year ending 31 December 2022.”
On its plantation business, the company said the price of CPO has weakened since end of Q22022 owing to stiffer competition from Indonesia palm oil and anticipation of potential global recession.
WTK said its tapes business remains challenging due to market uncertainties, rising freight rate and raw material costs.
With the acquisition of SCC, the company said it provides an opportunity for the group to diversify into the business of importer, wholesaler and retailer of frozen food.
It expects the new food business to provide the group with a long-term viable business with growth opportunity.
