Investor Relation

BP Plastics margins under pressure on soft global economy

PETALING JAYA: BP Plastics Holding Bhd is expected to see a slow sales recovery in the second half of the year as its margins come under pressure.

Kenanga Research said the company is guided for a slow recovery in sales as the global economy remains soft.

The reseach house said this would be partially cushioned by restocking by end users, who have depleted their inventories and the company’s shift towards high-margin products such as premium stretch film.

Meanwhile, Kenanga Research said substantive enquiries on its products during a recent international trade fair in Germany could translate to orders from new customers in financial year 2024 (FY24).

“BP Plastics margins will continue to come under pressure in the second half of the FY23 due to higher labour and energy costs.

“The higher labour cost stems from the upwards adjustment in the minimum wage last year, coupled with the reduction in the maximum weekly working hours to 45 from 48 pursuant to the amendment of the Employment Act 1955 effective January this year.

It said the full impact of the electricity tariff hike would be felt in the second half in the absence of an extension to the green electricity tariff programme, which will expire in June.