KUALA LUMPUR (May 26): MSM Malaysia Bhd’s net loss widened to RM35.88 million in the first quarter ended March 31, 2023 (1QFY2023) from RM27.68 million in the same quarter last year, as a result of lower margins and higher operating costs.
The country's largest refined sugar producer noted that it recorded a negative gross profit margin of 2% compared with negative 1% in the prior year as the group continued to operate on a negative margin for the wholesale segment without any subsidy or price adjustment.
The group also faced higher production costs, owing to a weak ringgit and a 65% increase in gas cost, which resulted in higher refining costs, said MSM in a bourse filing on Friday (May 26).
Quarterly revenue was down 1.26% to RM588.39 million in 1QFY2023 from RM595.92 million, due to reduced export sales volume in order to prioritise local sales demand.
MSM group chief executive officer Syed Feizal Syed Mohammad said the sugar industry is faced with a prolonged high input cost environment owing to the rise in costs of raw sugar, freight, natural gas as well as the volatility of the ringgit.
“Other input costs such as packaging materials, utilities and inland logistics have also increased significantly,” he stressed.
Syed Feizal foresees demand in the local and export markets to be stronger moving forward but high input costs continue to impede the improvement of the group’s financial performance.
“We are delighted with the government’s announcement yesterday to allow the local sugar industry to produce pure white refined sugar with prices to be determined by market forces. This will allow us to be more resilient against high input costs. MSM will continue to endeavour in returning to the black sustainably despite these input cost challenges,” he added.
Meanwhile, MSM said it intends to grow the export footprint further between 12% and 15% in the near term, citing that global sugar prices have been bullish due to food security concerns and global demand outstripping production.
Hence, the export market attractiveness will spur MSM volumes into China, the Philippines and Indonesia, it added.
MSM’s share price surged to a 15-month high to close at RM1.05 on Thursday, following the government’s announcement that MSM could sell fine white sugar at market price.
On Friday, investors took profit from the stock, leading to its share price closing down eight sen or 7.62% at 97 sen, for a market value of RM682 million.