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Teckwah Industrial's net profit up 16.2% on increase in income received from govt Covid-19 support schemes

TECKWAH Industrial posted a net profit of S$5.29 million for the half-year ended June 30, up 16.2 per cent from a year ago, on the back of an increase in other income received from government support schemes to deal with Covid-19. Revenue ticked down 2.5 per cent to S$76.69 million, dragged down by a decline in its packaging printing-related business, which makes up about half of its revenue.

Earnings per share stood at 2.26 Singapore cents, up from 1.95 Singapore cents for the same period a year ago.

An interim dividend of 0.5 Singapore cent was declared – the same as last year.

Its cash and cash equivalents increased by 7.5 per cent to S$50.6 million as at June 30, 2020 as compared to S$47.1 million as at Dec 31, 2019. This is mainly due to “better cash management on collection and prudent payment cycle and the deferred payout of FY 2019’s dividends till July 2020 as a result of delay of the annual general meeting”, said the company in a bourse filing.

In its outlook, the company noted that the Covid-19 pandemic and geopolitical tussles make it “difficult to determine” what would be the specific impact on the company.

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Currently, all its subsidiaries have resumed operations amid various restrictions imposed by the respective countries.

“We will continue to take steps to manage costs to remain competitive, while keeping a vigilant lookout for opportunities to further widen revenue sources in other markets in this challenging and uncertain time,” said the company.

Teckwah Industrial was recently in the crosshairs of activist shareholder Quarz, which wrote in a letter on July 28 that the packaging, printing and logistics firm should return more cash to shareholders as dividends, to address what Quarz sees as a lack of cash discipline and operational efficiency.

Quarz is the fourth-largest shareholder of Teckwah with a stake of more than 6 per cent.

In response, Teckwah had stressed the need for a sound cash management policy but Quarz was not convinced.

“We are working on a list of proposals to unlock shareholder value at Teckwah, and will be sharing them with the public and fellow shareholders in due course,” said Quarz, in an earlier statement.

Teckwah had requested for a trading halt on Tuesday.

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