MSM Malaysia Holdings Berhad (MSM) recorded a loss before tax (LBT) of RM33 million for the first quarter (1Q) FY2023, compared to LBT of RM25million for 1QFY2022 as a result of lower margins and higher operating costs.
The Group recorded a negative gross profit margin of 2 per cent compared to negative 1 per cent in the prior year as the Group continues to operate in the negative margin Wholesale segment without any subsidy or price adjustment.
The Group also faces higher production cost driven by 5.2 percent higher foreign exchange and 65 percent increase in gas cost which resulted into higher refining cost.
Lower revenue of RM588 million was recorded for the period under review compared to RM596 million a year ago due to reduced export sales volume in order to prioritise local sales demand.
MSM Group Chief Executive Officer, Syed Feizal Syed Mohammad (pic) said, “The sugar industry is faced with prolonged high input cost environment owing to the rise in cost of raw sugar, freight, natural gas and volatility of Ringgit Malaysia. Other input costs such as packaging materials, utilities and inland logistics have also increased significantly.”
“We foresee demands in the local and export markets to be stronger moving forward but the high input costs continue to impede the improvement of the Group’s financial performance. We are delighted with the government’s announcement yesterday to allow local sugar industry to produce pure white refined sugar with prices to be determined by market forces. This will allow us to be more resilient against high input costs. MSM will continue to endeavour in returning to the black sustainably despite these input cost challenges,” Syed Feizal said.
MSM has firmly established itself as a leading national sugar refinery, providing quality refined sugar products for over six decades. Therefore, MSM will ensure sufficient sugar supply for the local consumers as well as safeguarding Malaysia’s food security.
“For added mitigation, MSM Johor is in the initial phase of third boiler procurement to further strengthen operations sustainability. The planned improvement programme aims to not only boost the production utilisation factor (UF) but also align with MSM Johor’s vision of becoming a world-class sugar refining centre. There is tremendous headroom to grow the exports with an over 4.0 million tonnes per year market in Asia Pacific where MSM Johor has a geo-strategic advantage in the supply chain of retail and industry,” Syed Feizal further added.
MSM intends to grow the export footprint further between 12-15 percent in the near term. Global sugar prices have been bullish due to food security concerns and global demand outstripping production. The export market attractiveness will spur MSM volumes into China, Philippines and Indonesia.
