Hextar Global sees 43% jump in 3Q profit as agriculture segment lifts

Agrochemical manufacturer Hextar Global Bhd Monday posted a 43% year-on-year jump in its third quarter net profit, as revenue climbed 15%, driven by strong contributions from its agriculture segment.

Net profit for the three months ended Sept 30, 2020 grew to RM12.47 million from RM8.74 million, while revenue rose to RM111.56 million from RM97.18 million, its stock exchange filing recently showed. Quarterly earnings per share rose to RM1.54 from RM1.07 previously.

The group, whose businesses fall within the essential services category and were able to continue its operations without disruptions from the movement restrictions imposed to curb the pandemic, declared a third interim dividend of one sen per share, or about RM8.21 million in total, to be paid on Dec 28. This brings its year-to-date dividend declared to 3.2 sen per share, 79% of its current year's earnings.

The group's latest net profit is also 12% more from the preceding quarter's RM11.11 million, with revenue being 11% higher than the RM100.72 million it recorded then.

The continued improved earnings lifted the group's cumulative net profit for the nine months ended Sept 30 to RM33.03 million, from a net loss of RM5.35 million in the previous year's corresponding period, while revenue jumped 24% to RM316.85 million from RM254.51 million.

In a separate statement, the group noted that its improved earnings came despite the Covid-19 crisis. It said it would have seen a 77.2% y-o-y growth in its nine-month net profit, had a goodwill impairment of RM23.99 million been excluded from last year’s results.

Its gross profit margin improved to 22.2% in the latest period, compared to 18.8% previously, due to additional operational efficiencies and economies of scale, it added.

“Thanks to the strong performance in the agricultural segment and its higher earnings contribution. We are seeing strength in the market and I expect our businesses to continue on the positive growth track we had established this year,” said Hextar executive director Datuk Eddie Ong Choo Meng.

He also updated that the proposed acquisition of a 55% stake in Biogas Engineering (BEE) Sdn Bhd and its subsidiary Biogas Environmental Engineering Sdn Bhd has been completed recently, and that the transaction is expected to have a positive impact on the group’s revenue and earnings in the near future.

“Crude palm oil climbed to an eight-year high recently driven by recovered strong demand from India and China and we are on track to benefit from that price. Taking into account all aforesaid, we are very positive on our outlook, underpinned by our existing area of businesses and the expansion plans we have in place to grow our recurring income base.

"We are open to explore consolidations or joint ventures that provide operational efficiencies while being financially sound,” Ong further added.