Etika 2Q profit down 13.2% to RM4.3m on increasing costs

5% revenue decline also dealt damage.

Etika International Holdings Limited (Etika), one of the world’s largest manufacturers and distributors of sweetened condensed milk and a leading regional Food and Beverage (F&B) Group, announced that for the three months ended March 31, 2013 (Q2FY2013), Group revenue decreased 5.0% from RM246.8 million in Q2FY2012 to RM234.4 million in Q2FY2013 mainly on lower export sales in the Dairies Division.

Sales were affected by production delays at its Surabaya and New Zealand plants, though this was in part mitigated by higher topline contributions from its Trading and Frozen Food Division as well as the Others Division. The Group however, enjoyed a higher gross profit margin of 23.9% in Q2FY2013 compared to 20.4% in Q2FY2012, on lower raw material prices.

As at March 31, 2013, the Group maintained a healthy balance sheet and working capital position, with cash and cash equivalents of RM57.0 million.

Meanwhile, the Group also announced a 21.2% growth in profit after income tax (Net Profit) to RM12.3 million for the six months ended March 31, 2013 (H1FY2013). This was achieved notwithstanding a marginal 0.2% decrease in revenue to RM492.6 million, compared to the previous corresponding period (H1FY2012). Reduced export sales in Etika’s main Dairies Division and a delay in the commencement of commercial production at its sweetened condensed milk plant in Surabaya coupled with teething production and operational issues at its new beverage plant in New Zealand had some impact on the Group’s topline for H1FY2013.

Commenting on the Group’s half year results, Etika’s Group Chairman, Dato’ Jaya Tan said, “The pace at which Etika continues to develop each business segment continues to gather momentum. Supported by a strong showing in the first quarter, the Group has maintained a healthy first half performance despite stiff market conditions and some production delays in Indonesia and New Zealand experienced in the second quarter.”

To continually reward its shareholders, the Board is pleased to declare a tax exempt (1-tier) interim dividend of 0.3 Singapore cent per share.

Group Chief Executive Officer, Dato’ Kamal Tan, said, “Prices of raw materials were generally stable in the quarter and are expected to remain so going forward, which will be beneficial to us in terms of costs. There remains untapped market potential in each of our four business segments as we continue to strengthen our production capabilities, branding, marketing and distribution network to better position ourselves amongst the competition. We are fairly optimistic that reasonable growth can be attained moving forward, as we continue to keep abreast of industry conditions and act accordingly.”