SPECIALTY pole maker Mestron Holdings Bhd saw its net profit for 4Q FY2021 ended Dec 31, 2021 dipped by more than 50% to RM1.03 mil from RM2.27 mil in the corresponding quarter a year ago.
The decline has led its full-year net profit for the financial year ended Dec 31, 2021 to RM3.13 mil which is almost half of the RM6.14 mil posted in FY2020.
According to a Bursa Malaysia filing, the lower profit was due to loss-making subsidiaries and fluctuations in the price of raw materials such as steel plates and steel pipes in line with volatility in global steel price movement.
Despite the weaker net profit during the financial year, demand for Mestron’s products remains robust as evident by its stronger revenue.
In 4Q FY2021, the group recorded a 15.5% rise in revenue to RM21.49 mil which led to a full-year revenue of RM58.35 mil. This represents a 3% revenue growth from RM56.64 mil recorded in FY2020.
“It has been a challenging year for the group as the prolonged COVID-19 pandemic has disrupted the supply chain globally, leading to a fluctuation in raw material prices such as steel,” commented Mestron’s managing director Por Teong Eng.
“Despite the difficult operating environment in view of movement restrictions, we have taken proactive measures to mitigate the impact on the group’s earnings.”
At the end of the day, the group’s resilience coupled with strong demand for its products has enabled Mestron to sustain its profitability and revenue growth momentum.
Going forward, the group’s outlook remains positive as revenue is expected to inch higher led by strong demand for specialty poles which are mainly to cater for the telecommunication sector.
“The order backlogs are growing as demand for our specialty poles remains robust, especially for the telecommunication sector,” noted Por. “The rollout of 5G network in Malaysia continues to be a catalyst for the group as this would keep demand for our specialty poles strong.”
This development is vital to drive Mestron’s growth going into FY2022 given the group’s Malaysian exposure contributes about 93.5% of its revenue.
Aside from that, the Mestron plans to utilise its healthy financial position through value-accretive efforts and diversification to expand its earnings base and visibility.
At the close of yesterday’s trading, Mestron was up 0.5 sen or 1.61% to 31.5 sen with 1.85 million shares traded, thus valuing the company at RM293 mil. – Feb 26, 2022
