SCGM returns to the black in Q320, expands products portfolio

THERMOFORM food packaging manufacturer SCGM Bhd’s returned to the black in the third quarter ended Jan 31, 2020 (3Q20) with a net profit of RM4.2 mil against a net loss of RM694,000 in the same quarter last year.

Revenue eased to RM51.6 mil from RM55.6 mil a year ago, SCGM said in a statement yesterday.

The improved financial performance was driven by better sales mix, lower resin price, lower interest expense and partial utilisation of last year’s capital allowance and reinvestment allowance brought forward.

Correspondingly, the group’s nine months ended Jan 31, 2020 (9M20) net profit surged 415.5% to RM10.4 mil from RM2 mil previously, largely due to improved sales mix, lower cost of raw materials, lower interest expense, higher recovery of debts previously provided with an allowance for doubtful debts.

The group’s revenue, however, dipped 4.8% to RM160.8 mil from RM168.9 mil due to its strategic direction of focusing on higher-margin customised packaging products instead of high volume non-customised F&B packaging, and higher-than-usual sales from the tax-free period in June to August 2018 after removal of the Goods and Services Tax (GST).

Furthermore, the revenue decline was partly attributable to lower-than-usual sales in 3Q20, which was affected by the Chinese New Year holiday and ban on heavy vehicles during the holiday period.

“Our resounding financial turnaround is a testament to the group’s strategic shift of not only focusing on higher-margin products but also intensive push in expanding into new overseas market.

“We have expanded our product portfolio by producing protective medical equipment. This expansion is both timely and necessary in order to urgently provide frontliners with essential equipment to combat Covid-19 in Malaysia,” SCGM managing director Datuk Seri Lee Hock Chai said.  

Lee said since the commencement of face shield production, the company delivered RM2.9 mil in sales to date and is actively engaging the Malaysia medical community by supporting and equipping them with the crucial protective equipment.

SCGM has allocated RM1 mil in capital expenditure (capex) for the production of protective medical equipment, comprising medical face shields and face masks.

Since February 2020, the group commenced production and supply of two types of medical face shields by repurposing one existing production line and purchasing three units of ultrasonic sealing machines.

The current daily production capacity for the new medical face shields is 21,000 units.

In anticipation of higher demand for medical face shields, SCGM will purchase additional two ultrasonic sealing machines.

Additionally, SCGM will purchase new machinery for the production of face masks, which is expected to arrive in April 2020, Lee added.

Prior to this, SCGM’s medical product portfolio comprises ear probe covers and kidney trays which were mainly exported to Southeast Asian countries.

Moving forward, Lee said SCGM remains cautiously optimistic of navigating through this unprecedented challenging landscape.

“We are able to operate at 50% production capacity during the Movement Control Order (MCO) period in line with the directive from the Ministry of International Trade and Industry.

This ruling enables us to continue meeting essential product delivery commitments in support of our customers, especially in the essential F&B sector,” said Lee. – March 31, 2020, Bernama

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