KUALA LUMPUR (Aug 15): Integrated chemicals and lubricants distributor Samchem Holdings Bhd (KL:SAMCHEM) saw net profit fall 6.3% to RM5.06 million in the second quarter ended June 30, 2024 (2QFY2024) from RM5.4 million a year ago, mainly due to lower gross profit margins.

This resulted in a lower earnings per share of 0.93 sen for 2QFY2024 from 0.99 sen for 2QFY2023.

Revenue for the quarter grew 8% to RM298.43 million from RM276.24 million a year ago, on higher sales volume. However, average selling prices remain subdued in 2QFY2024.

The group also declared a second interim dividend of half a sen per share. The date of book closure will be announced later, said Samchem in a filing with Bursa Malaysia on Thursday.

Moving forward, Samchem said it will be considering dividend declaration on a bi-annual basis to streamline its financial processes and reduce administrative costs.

For the first six-month period (1HFY2024), the group’s net profit fell 6.5% year-on-year (y-o-y) to RM11.15 million, despite revenue increasing 12.2% y-o-y to RM596.68 million on higher sales volume.

On prospects, the group said it aims to capitalise on the potential opportunities arising from both the shifting trends of Chinese manufacturers’ supply chain, as well as the relocation of global chemical plants to this region. As such it has expanded its warehousing capacity in both Malaysia and Vietnam.

In a statement on Thursday, Samchem executive chairman Ng Thin Poh said 2QFY2024 was marked by softer activity levels due to two festive holidays in Malaysia and Indonesia.

"On the whole, we observed continued cautious sentiments amid China's slower-than-expected economic recovery and US recessionary concerns. Despite this, manufacturing activities in our key markets are stabilising, with stronger chemical demand from the construction and oil and gas industries," he added.

To navigate current market conditions, the group is actively refining its product and service offerings.

"Our strategy involves penetrating new industries within our key markets, broadening our product range, and enhancing our value-added services. These initiatives will enable us to improve our market share as we await demand recovery," said Ng.

He views the ongoing consolidation within the global petrochemical industry as a positive development, which could potentially support chemical prices thereby enhancing Samchem's margins.

“This trend may also prompt manufacturers to streamline operations by outsourcing distribution, creating growth opportunities for distributors like us. With our expanded infrastructure in Malaysia and Vietnam, we are well positioned to capitalise on these opportunities,” he added.

At Thursday’s closing, Samchem’s shares closed down one sen or 1.79% at 55 sen, giving the group a market capitalisation of RM299.2 million. The stock has fallen 9.8% so far this year.