KUALA LUMPUR: Muda Holdings Bhd fell into the red with a net loss of RM15.76 million in the third quarter ended Sept 30, 2016, compared to RM7.45 million in profit reported for the previous year’s corresponding quarter.

The group told Bursa Malaysia in a filing yesterday that the drop in profitability was due to the write-off of inventory, warehouse and other assets, following a fire incident.

“Although the fire incident did not affect the manufacturing operation of the paper mill in Tasek, Penang, it caused a write-off of RM21.38 million in the quarter under review. Claim for insurance compensation is in progress and the expected compensation from the insurer has not been recognised in the results for this period,” said Muda.

Meanwhile, revenue for the quarter was 8% higher at RM281.58 million, compared with RM261.04 million a year earlier, attributed to better selling prices and higher demand for industrial grade paper, as its customers switched to local products on a weak rinngit.

For the cumulative nine months up to Sept 30, net profit dropped to RM894,000 from RM16.4 million in the previous year, while revenue rose 10% to RM856.87 million from RM777.43 million previously.

“The group expects demand for both industrial grade paper and paper packaging from overseas and domestic markets to remain placid for the remaining period of the year.

“Even with the tight supply of recovered paper expected in the next quarter, the group’s continuous efforts to improve productivity through upgrading of machinery and processes have raised efficiency and this will soften the impact of higher cost of production,” it said.

The group expects to remain profitable for the current financial year, as it expects higher contribution of stationery products at year end.

Muda closed unchanged at RM1.61 yesterday, giving it a market capitalisation of RM491.13 million.