BPPLAS – Record year for FY2021, 56.7% y-o-y profit growth; Higher Q1 FY2022 Revenue but with moderated earnings due to higher costs of production
Batu Pahat, 23 May 2022 – BPPLAS (5100, Main Board, Industrial Products & Services), delivered another historical high revenue and earnings in FY2021, in a year marked with resilience and agility despite challenging macro environment and uncertainties, such as supply chain and logistical disruptions since the emergence of COVID-19 pandemic in early 2020.
The Group conducted its fully virtual 18th Annual General Meeting (“AGM”) via live streaming and online voting on 23rd May 2022, allowing shareholders and investors to participate remotely, in view that COVID-19 concerns still prevail despite entering endemic stage.
The Group recorded operating revenues of RM447.1 million in FY2021, representing a growth of 41.2% compared to RM316.6 million in FY2020, driven by higher sales volume and average selling prices. Sales volumes had increased year-on-year by 14.4%. For FY2021, export sales market recorded a strong growth of 46.1% and contributed 74% of the Group’s overall business. Meanwhile, domestic sales remained resilient, contributing 26% of total revenue and grew by 29.2% supported mainly by customers in the food and beverage (“F&B”) and other essential sectors despite various restrictions imposed over different phases of movement control orders (“MCOs”).
The Group’s profit before tax (“PBT”) increased by 45.9% to RM56.8 million in FY2021 (FY2020: RM38.9 million), mainly driven by stronger demand, along with appropriate cost-rationalisation measures, improved efficiencies, and better product mix. Similarly, profit after tax (“PAT”) increased by 56.7% from RM29.7 million in FY2020 to RM46.5 million in FY2021, with a lower effective tax rate of 18.4% (FY2020: 24.5%) due to reinvestment allowance tax incentives in one of the Group’s subsidiaries.
In December 2021, the Group completed corporate exercises involving the bonus issue of shares on the basis of 1 bonus share for every 2 ordinary shares, and the bonus issue of free warrants on the basis of 1 warrant for every 5 ordinary shares. The intention is to reward the Group’s shareholders, improve the stock liquidity and provide shareholders the opportunity to increase equity participation in the company through the free warrants issuance.
Committed to its dividend policy of distributing at least a minimum 40% payout of its net profits annually, the Group has consistently distributed annual dividend payout ratio above the minimum in the past 5 years. In FY2021, total dividends declared and paid by the Group amounted to RM22.5 million, representing a 48.5% dividend payout ratio (FY2020: RM15.0 million; 50.6%).
During FY2021, the Group deployed RM33.2 million in new machinery, equipment and facility expenditures. In addition, approximately RM29.5 million of CAPEX investments will be allocated for FY2022, in line with the Group’s strategic investment plans to grow and re-invest into new technologies and expand market share. The Group had successfully commissioned its 9th Cast Stretch Film machine in December 2021, and a new 10th Cast Stretch Film machine is expected to be installed and operational by the end of 2022. The two stretch film machines are supplemented with Nano-technology which should enable further product innovation and differentiation.
The Group had announced its financial results of the first quarter of FY2022 (“1Q22”) via Bursa LINK after the market closed today.
For 1Q22, operating revenues achieved was RM131.9 million, which is a growth of 31.8% compared to RM100.1 million in 1Q21, contributed by a stronger demand and higher selling prices. However, in the quarter under review, unaudited PBT and PAT recorded were RM9.2 million and RM7.5 million respectively, declining by -23.0% and -22.1% compared to RM11.9 million and RM9.7 million in 1Q21. The lower (unaudited) profits were mainly due to elevated production costs arising amongst others, from the unexpected Ukraine conflict.
The Board of Directors proposed a first single tier interim dividend of 1.5 sen per share in respect of the financial year ending 31 December 2022 based on the enlarged share capital after the completion of the bonus issue of shares. The entitlement date of the dividend is fixed on 22 June 2022 and payment will be made on 7 July 2022.
Recently, Bank Negara Malaysia (“BNM”) increased the overnight policy rate (“OPR”) by 0.25% to 2% as global inflationary pressures have increased sharply due to rise in commodity prices, continuous strained supply chain surrounding the on-going geopolitical conflicts and the strict COVID-19 containment measures in China. Under the current volatile environment, businesses are experiencing high inflation and cost pressures as a result of high commodity prices, increased operating costs, and tight labour market conditions.
Nevertheless, the Group is cautiously optimistic on the sustained and growing demand for plastic packaging products along with the economic recoveries and improving market sentiment. Moving forward, the Group will continue to undertake prudent measures on supply chain and cost management, while remaining committed to the long-term sustainability of the business, as well as preparedness in undertaking suitable capacity expansion as well as automation and technology adoption.
Despite the headwinds and challenges ahead, the Group remains committed to deliver a profitable performance for financial year ending 31 December 2022 and generate long-term growth and value creation for all our stakeholders.