Chemical Industries Far East (C05) H1 2024 earnings summary

Executive summary

• H1 FY2024 revenue fell 23.6% YoY to $38.4m as weaker chemical demand and lower commodity prices pressured sales; higher energy costs contributed to a $1.42m loss before tax.

• Net loss was $1.515m versus net profit of $596k a year earlier; basic and diluted EPS was a loss of 2.0 cents versus earnings of 0.78 cents.

Financial highlights

• Gross profit declined 37.5% YoY to $3.675m from $5.881m; lower gross profit margin was mainly attributed to higher energy costs.

• Other income rose 8.4% to $1.348m, mainly on a $358k increase in interest income, partly offset by lower government grants and storage income.

• Distribution expenses fell 14.3% to $2.878m, mainly from $0.5m lower freight costs; administrative expenses rose 24.4% to $3.516m, mainly due to a loss allowance.

• Cash and cash equivalents were $20.362m at 30 Sep 2023, down $9.080m from 31 Mar 2023; total equity fell $2.7m to $128.8m.

Outlook and guidance

• Weak global growth, slowing Chinese economic activity and subdued goods exports are expected to weigh on chemical demand into 2H FY2024.

• High electricity costs are expected to remain a key production cost through mid-2024; electronics demand is forecast to remain weak through year-end, while pharmaceuticals and utilities demand is relatively stable.

• Plans include securing supply contracts, diversifying key raw-material sources, improving energy efficiency and targeting top-tier customers and growth industries.

• In Myanmar, political uncertainty and inflation remain headwinds; in Properties, plans include pursuing higher capital values and rental yields and valuing properties at FY2024 year-end.