Hextar Industries Bhd (HIB) registered a net loss of 12.7 million for the fourth quarter ended 31 December 2023 (4Q2023), as it posted a lower quarterly revenue of RM166 million.
In a statement today (Feb 22), the agro-chemical manufacturer said the drop was due to lower average selling prices and lower volume of fertilisers delivered due to the monsoon season, coupled with the impairment of goodwill.
“For the full financial year ended 31 December 2023 (FYE2023), net profit about 26% to RM42.1 million from RM56.5 million, from the impact of impairment of good will on the back of RM937 million in revenue.”
In 2022, the group has changed its financial year end from 31 August to 31 December. As such, there is no comparative figures for the corresponding period of the previous financial year.
HIB said that it has previously recorded goodwill on the acquisition of its outdoor equipment rental business, partially written down as a result of the impact of the Covid-19 pandemic and the movement control orders on the business.
“However, whilst the business has returned to profitability, the sector has only seen marginal expansion. Management has thus decided to impair the remaining balance of goodwill of RM14.4million in the current financial year,” it added.
Commenting on the 4Q2023 results, HIB group managing director Benny Ang said the group’s performance remains commendable despite the challenges faced by the group during the quarter.
“Even with challenges such as the weakening of the ringgit and softening of fertiliser prices in the global market, we would have made a net profit of RM1.7 million if not for the goodwill impairment.
“The goodwill impairment arose from the acquisition of the equipment rental business back in 2018 and is solely an accounting entry and a non-cash item.
“As it has no impact on our business performance, we decided to charge out the remaining goodwill in our books as a one-off impairment in order for our balance sheet to be more reflective of the group’s net asset value moving forward,” he said.
Ang added with the anticipated improvement in sales volumes of fertilisers following the end of the monsoon season, HIB is optimistic on its financial performance in the coming quarters.
HIB proposed a second interim single-tier dividend of one sen per ordinary share for FYE2023.
Meanwhile, in respect of the Industrial and Consumer segment, its executive director Alex Sham said the segment has turned around in 4Q2023 and achieved a net profit of RM2.1 million from a net loss of RM0.2 million reported in the preceding quarter.
“This is mainly due higher sales from the heavy equipment and equipment rental businesses, together with the inclusion of the newly acquired subsidiaries such as Pacific Office (M) Sdn Bhd and Hextar Mitai Sdn Bhd.
“These are established companies with profitable operations and we look forward to consolidating their full year results in financial year ending 2024,” he added.
On its application to the Securities Commission for the transfer to the Main Market of Bursa Malaysia Securities Bhd, Ang said that the application is progressing smoothly.
“We hope to be able to announce some positive news in the coming weeks.”
