MSM Malaysia Holdings Berhad (MSM), a subsidiary of Felda Global Ventures Holdings Berhad (FGV), recorded a pre-tax profit of RM27.03 million in its fourth quarter earnings, an improvement of 12.0 per cent from the corresponding quarter.
MSM recorded stronger consolidated revenue of RM2.67 billion for the financial year ended 31 December 2017 as compared with RM2.66 billion in the same period last year. The 0.3% revenue increase was mainly due to a 16.5% improvement in the overall average selling price tied with a 12.0% offset reduction in overall tonnage sold in 2017.
For the financial year under review, a loss before tax (LBT) of RM15.81 million was recorded- mainly due to higher average raw sugar cost by 20.0 per cent whilst a sharp 37.0 per cent spike for Year-on-Year (Y-o-Y) basis increase for raw sugar market price between the period of early 2016 and 2017.
As USD peaked at 4.5002 in January 2017, and bleak improvements in the local currency devaluations led to a steep increase in raw sugar cost by 9.59 per cent in terms of Ringgit per metric tonne compared to 2016.
Due to the timing of MSM’s last raw sugar payment which occurred earlier before the start of USD/MYR drastic downtrend in mid-November 2017, MSM’s rate of buying USD is still higher by 1.05 per cent in comparison to the corresponding quarter.
The disastrous chain of events moulded by these uncontrollable external market factors amplified production cost by a whopping 14.0 per cent compared to 2016 and does not augur well with MSM’s operating cost.
MSM’s executive director, Datuk Khairil Anuar Aziz said in a statement that sugar industry operates in a cyclical nature and sugar manufacturers globally witness a double-whammy in 2017.
“Raw sugar price spiked from USD0.18 per lb in October 2016 to USD0.21 per lb in February 2017 (3-year record high), representing almost 20.0 per cent increase within the period and back-to-back suppression on USD/MYR significantly pressured our margins.
“Our business depends on optimising margins between the volatile prices of raw and the regulated price of refined sugar.
“With the odds against us, we remain responsibly committed to ensure an adequate sugar supply in the country,” he said.
He said that the group are to the Government for the domestic sugar price adjustment in March 2017 from RM2.84 to RM2.95 to cushion the margin squeeze and maintain their leading market position at 58 per cent despite the disruption of sugar import permits (APs) and sugar smuggling transhipment activities.
Moving forward, MSM is focusing on several potential growth initiatives within the South-East Asia (SEA) market which is in line with its approved strategic roadmap.
A clear direction for 2018, MSM is optimistic to solidify its leadership role in the sugar industry and improve its earnings, delivering core financial values and long-term profitable growth.
