Chemical Industries H2 net profit up 344% on higher revenue

Chemical Industries (Far East), which manufactures and sells chemicals, posted a 344.2 per cent jump in net profit to S$9.4 million for the second half ended March 31, 2022.

Revenue rose 53.7 per cent to S$50.2 million following an improvement in sales of the group’s core chlor-alkali chemical products.

However, the company’s gross profit margin fell to 26 per cent from 31 per cent due to rising energy prices and raw material costs, amid supply chain and logistics disruptions.

Nevertheless, higher other income, reduced distribution expenses due to lower piping charges, and a S$1 million credit provision due to overprovisions of prior year taxes led to a surge in net profit during the period.

Earnings per share was 12.38 Singapore cents compared with 2.79 Singapore cents a year ago.

For the full year, net profit rose 22.1 per cent to S$6.8 million while revenue increased 34.9 per cent to S$85 million.

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The group has declared a final dividend of 1.5 Singapore cents per share, unchanged from a year ago, and a special dividend of 1.8 Singapore cents per share to commemorate the group’s 60th anniversary. The dates on which books close and dividends are paid will be advised at a later date.

Chemical Industries said its profitability will be impacted by the increase in energy cost, a major component of its cost of sales. Energy cost is expected to remain high in the coming months due to the Russia-Ukraine conflict.

Furthermore, the group continues to be affected by escalating raw material prices and shipping costs, it said.

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Chemical Industries recently entered into a new energy contract at significantly higher rates, which take effect from Jul 1. “The board expects the group’s prospects to remain challenging in the months ahead. The group continues to look at ways to increase its sales as long as the price of imported caustic soda remains high,” it said.

Operations in Myanmar remain difficult as sales to its major customer remain uncertain. It is also experiencing currency volatility, and recorded an impairment loss of S$6.2 million in property, plant and equipment in Myanmar.

Shares in the company last traded at S$0.735 on May 24.