KUALA LUMPUR (Jan 16): Integrated chemical group Ancom Nylex Bhd (KL:ANCOMNY) reported a 31% decline in net profit for the second financial quarter ended Nov 30, 2024 (2QFY2025) to RM15.16 million, from RM22.12 million a year earlier, on elevated freight cost and sharp foreign exchange (forex) fluctuations that affected its gross profit margin.

This was offset by higher segmental profit at the logistics and polymer divisions.

The lower quarterly earnings resulted in lower earnings per share of 1.26 sen for 2QFY2025, compared with 2.33 sen for 2QFY2024.

Revenue for 2QFY2025 fell 11% to RM450.71 million, from RM505.16 million in 2QFY2024, largely due to lower contributions from the industrial chemical division stemming from lower prices and orders.

No dividend was recommended or proposed for the latest financial quarter.

The weak quarterly earnings dragged net profit for the first half ended Nov 30, 2024 (1HFY2025) to RM28.37 million, down 34% from RM42.92 million a year earlier. Revenue also fell 3% to RM966.25 million from RM992.52 million over that same period.

In a statement on Thursday, Ancom Nylex managing director and group chief executive officer Datuk Lee Cheun Wei said the group was not spared from macroeconomic headwinds in 1HFY2025, but pointed out that freight costs had been trending downwards, and forex movements had somewhat stabilised.

"More importantly, the sales volume for our agricultural chemical segment has been healthy, and we expect this demand to continue in the coming quarters, as we advance towards a brighter 2HFY2025.

"Separately, our financial position is improving as part of our efforts to strengthen our balance sheet. This provides us with a stronger backing and perhaps opportunities for synergistic mergers and acquisitions,” he added. The group’s net gearing improved to 0.13 times at end-November 2024, from 0.44 times at end-August 2024. Total borrowings were reduced to RM248.9 million from RM360 million over the same period.

In a separate filing with Bursa Malaysia, Ancom Nylex said supply chains are being reshuffled as producers hedge against geopolitical risk, often at higher costs.

"The conflict in the Middle East has caused seaborne trade to be rerouted, while higher than-expected demand and weather have also increased shipping costs, adding to shipping times and snarled travel. These factors may affect the businesses of the group for the remainder of the financial year ending May 31, 2025 (FY2025)," the company said.

Nevertheless, it said it will continue to be vigilant in managing these risks, and continue to explore and expand opportunities for its businesses.

"Barring any unforeseen [circumstances], the group should perform satisfactorily for the remaining of the financial year," it added.

Ancom Nylex shares closed unchanged at 99.5 sen on Thursday,  giving it a market capitalisation of RM1.16 billion. The stock has fallen 7% over the past one year.