KUALA LUMPUR: Tien Wah Press Holdings Bhd
’s earnings fell 71.5% to RM4.16mil in the third quarter ended Sept 30 due to lower sales and retrenchment cost.
The RM10.45mil drop in the printing services provider’s earnings was partly a reflection of the 13.9% slide in its revenue to RM82.93mil.
Tien Wah, whose revenue mainly comes from printing cigarette packaging, told Bursa Malaysia that it posted lower revenue due to the sluggish demand in certain cigarette brand-related packaging products and change of pricing of some products to a major customer.
In addition, there was the impact from its wholly-owned Vietnam subsidiary becoming a jointly controlled entity starting from Dec 31, 2015. Tien Wah had sold a 50% stake in the unit, now renamed Toyo (Viet)-Dofico Print Packaging Co, in order to secure long-term sales volume from a major tobacco company in Vietnam.
Tien Wah attributed the “unfavourable” profit to the lower revenue as well as lower gross profit margin and a retrenchment cost of RM5.1mil. During the quarter, the group laid off the remaining excess personnel at its 51% owned Australian operation, Anzpac Services (Australia) Pty Ltd.
“The retrenchment arose from the reorganisation of production footprint within the group in order to improve its strategic positioning to service the customers and reduce operating cost over the longer term,” Tien Wah said.
The last time Tien Wah had seen its quarterly earnings fell year-on-year was in the first quarter of last year, and the reason was a restructuring that led to a redundancy expense of RM6.9mil being recognised in that quarter.
On the group’s prospects this year, Tien Wah’s directors expect the outlook to continue to be challenging amid the volatile global environment.
“Besides efficiency improvement, wastage control and active cost containments, the group is continuing to develop new opportunities which would lead to volume growth from new customers in other geographical segments and existing customers over the longer term,” the company said.
The directors do not recommend any interim dividend in respect of the quarter ended Sept 30. Tien Wah had earlier announced an interim dividend of 4 sen per share.
In February, its board announced the adoption of a dividend policy whereby the company would strive to distribute 50% of its net profit after taxation and minority interest annually starting from this financial year.
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