KUALA LUMPUR: Ajinomoto (M) Bhd posted a 67.2% drop in its net profit to RM2.94 million for the second quarter ended Sept 30, 2022 (2QFY2023), from RM8.95 million a year earlier, despite logging a 43.69% higher revenue of RM158.15 million from RM110.07 million.
The company blamed the weaker earnings on the RM1.9 million operating loss its consumer business recorded due to the increase in key raw materials’ purchase prices and higher freight costs.
“In addition, the company incurred higher administrative and selling expenses including staff costs, transitional costs related to factory relocation and sales promotion expenses in the current quarter.
“Other finance expenses was RM800,000 in the current quarter after the recognition of financing cost arising from the Islamic financing facility,” it added.
Meanwhile, the company said revenue for the quarter was boosted by higher contributions from both its consumer business segment and industrial business segment on the back of higher sales volume and better selling prices in the domestic and export market.
For the six months ended Sept 30, 2022 (6MFY2023), Ajinomoto’s net profit shrank over ten-fold to RM2.09 million from RM24.16 million last year, while cumulative revenue rose 33.01% to RM299.66 million from RM225.14 million.
Going forward, Ajinomoto said the company expects the outlook to be challenging due to the high purchase price of key raw materials, volatile foreign exchange rates and inflationary pressures on its operating costs.
“The management will continue to monitor the progress of the economy, review its sales strategies and strengthen cost management to sustain the business growth,” the company added.
At the noon break, shares in Ajinomoto were down two sen or 0.18% at RM11.80, giving the company a market capitalisation of RM687.02 million.
After more than five decades operating out of Kuchai Lama in Kuala Lumpur, Ajinomoto said it will relocate to its new factory complex located in Seremban, Negeri Sembilan.
In filing on Tuesday (Nov 29), the seasoning manufacturer said its directors have approved the relocation and, in conjunction, also approved for the company to assess the prospects of potentially disposing of the land in Kuchai Lama.
“As part of the assessment, the company will be inviting interested parties from the open market to make an offer to purchase the land for the company’s consideration.
“Final decision on the disposal of the land will only be made by the board after the completion of the assessment,” Ajinomoto said.
According to Ajinomoto’s 2022 annual report, the company commenced operations at the Kuchai Lama factory back in 1965, over five decades ago.
Ajinomoto had in 2019 shared the company’s plans to relocate its factory to Negeri Sembilan given Kuchai Lama’s rapid commercial, residential and infrastructure development.
It was previously reported that the company invested RM355 million into the construction of the new plant including Ajinomoto’s corporate office in Techpark @ Enstek in Seremban, Negeri Sembilan.
Source : The Edge Markets