This article first appeared in The Edge Malaysia Weekly on September 18, 2023 - September 24, 2023

Despite the challenges posed by the pandemic, the Ukraine-Russia geopolitical conflict and ensuing sanctions, as well as global inflationary pressures, market expansion services provider DKSH Holdings (M) Bhd has demonstrated resilience in navigating the economic turbulence.

DKSH Malaysia’s remarkable performance is reflected in its solid earnings growth during the three-year period under review.

For the financial year ended Dec 31, 2022 (FY2022), DKSH Malaysia raked in a net profit of RM104.2 million, surpassing the RM39 million (FY2019), RM48.9 million (FY2020) and RM91.3 million (FY2021) it made in the preceding three years and marking three straight years of continuous net profit growth. Revenue came in at RM7.16 billion, up 6.86% from the RM6.7 billion it made in FY2021, and 12.6% more than the RM6.36 billion it recorded in FY2020.

DKSH Malaysia achieved a compound annual growth rate of 37.5% in its profit after tax (PAT) in the three-year review period, based on The Edge Malaysia Centurion Club Corporate Awards methodology, winning the award for the highest PAT growth over three years in the consumer products and services sector.

The company attributed its strong financial results to a “major improvement project” undertaken throughout the year in its marketing and distribution segment, which contributed RM4 billion to the group’s top line and is one of its two major business segments. The project included optimisation of organisation structure through simplification and reduction of approval layers, combined with a sharp focus on client profitability.

Net sales at DKSH Malaysia’s logistics segment — its other major segment — increased 6.9% to RM3.1 billion in 2022 from RM2.9 billion in 2021, while profit increased by 17.4% to RM61.4 million from RM52.3 million, thanks to a combination of organic growth and new business developments.

The acquisition of new business AcuTest Systems (M) Sdn Bhd, a distributor of clinical diagnostic point-of-care testing analysers, diagnostic and screening devices and instruments, and laboratory systems in Malaysia, played a part. According to the group, the acquisition expanded its portfolio in the medical devices industry by providing access to complementary supplier and product portfolios and a solid customer base.

The rise in DKSH Malaysia’s profit also put its return on equity (ROE) on an upward trend. The company’s ROE was at 7.6% in FY2020, increasing to 12.9% in FY2021 and 13.2% in FY2022. This translated into a weighted ROE of 12% for the period under review.

The company has been rewarding its shareholders with regular dividends over the past three years, with a dividend per share of 10 sen for FY2020, 11 sen for FY2021 and 32 sen for FY2022, while its share price (adjusted) climbed from RM1.79 at end-March 2020 to RM4.70 at end-March 2023.

Its performance, which has grown from strength to strength, was driven not only by the market recovery but also dedicated focus on driving efficiencies amid rising commodity prices and wages, which highlighted DKSH Malaysia’s adaptability and well-placed priorities.

Majority-owned by DKSH Holding Ltd of Switzerland with a 74.31% stake held under its indirect wholly-owned DKSH Resources (Malaysia) Sdn Bhd, the group started its business with a branch office in Penang in 1923, before being incorporated as DKSH Holdings (Malaysia) Bhd on Dec 24, 1991. It was then listed on the Main Market of Bursa Malaysia on Dec 13, 1994.

Today, DKSH Malaysia has a strong presence in the fast-moving consumer goods industry with an additional distribution service for chilled and frozen products. It also gained a strong foothold in the confectionery market segment with house brands SCS and Buttercup. At the same time, it has expanded its business offerings to include food services to cater for new markets in the hotel, restaurant and café industries.

“To maintain our success, we will continue to prioritise driving our people capability, digitisation and automation. Our focus remains to secure new business, improve cost efficiency, manage working capital, and monitor the short-term outlook to navigate the current environment prudently.

“As we celebrate 100 years of our presence in Malaysia in 2023, we are well positioned to benefit from favourable long-term market, industry and consolidation trends in the Asia-Pacific region,” DKSH Malaysia said in its 2022 annual report.

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