KUALA LUMPUR (Aug 21): Evergreen Fibreboard Bhd has returned to the black for the second quarter ended June 30, 2023 (2QFY2023) after logging a net loss in the previous two quarters, thanks to a higher sales margin, as well as lower raw material and operational costs.

The wood panel products maker posted a net profit of RM4.81 million or 0.57 sen per share for the quarter, compared with a net loss of RM19.58 million or 2.32 sen per share in 1QFY2023. Revenue grew 37.8% to RM235.15 million from RM170.63 million.

On a year-on-year basis, however, the group’s net profit was 73.8% lower than the RM18.34 million or 2.17 sen per share reported for 2QFY2022, as revenue declined 28.8% to RM330.11 million, and also due to a rise in operational cost on the back of an increase in electricity surcharge and minimum wage.  

The group did not declare any dividend for 2QFY2023.

Evergreen said quarterly sales volume fell compared to a year earlier, as a result of continued soft furniture demand from the US and Europe in a high-interest-rate environment, which impacted its ready-to-assemble segment and panel board segment.

For the first half of FY2023, the group recorded a net loss of RM14.77 million and a revenue of RM405.78 million, versus a net profit of RM35.87 million and revenue of RM649.44 million in the same period of FY2022.

While furniture demand from the US and Europe remained underwhelming, the group said the bright note is that the demand for medium-density fibreboards in the Middle East has improved.

Evergreen said signs of improvement in sales persisted in 3QFY2023, although it is unsure if the improvements are sustainable and will depend on the resolution of the various challenges and consumer confidence.

“The group continues to restructure in order to mitigate and overcome the challenges from external and macro-economic factors. The relocation of the panel board line from Malaysia to Indonesia is ongoing. Management remains cautious and will maintain a healthy cash balance to ensure sufficient liquidity,” it said.

As at June 30, Evergreen has RM113.4 million in cash and cash equivalents, while its loans and borrowings amounted to RM122.52 million.

Shares in Evergreen closed 0.5 sen or 1.56% lower at 31.5 sen on Monday (Aug 21), giving the group a market capitalisation of RM266.62 million. Over the past year, the stock has fallen 37%.