Tien Wah makes a loss for first time in 15 years due to plant closure cost

BAT PJ

KUALA LUMPUR: Tien Wah Press Holdings Bhd (TWPH) reported a loss attributable to shareholders of RM14.45mil for the second quarter (Q2) ended June 30, 2017 - its first quarterly loss in 15 years.

The company, whose revenue mainly comes from printing cigarette packaging for British American Tobacco, told Bursa Malaysia that despite a 34% higher revenue of RM108.47mil, it swung to a loss from a profit of RM6.12mil a year earlier.

This dragged its first half-year bottom line to a loss of RM10.32mil against earnings of RM11.72mil in the corresponding period of 2016.

TWPH said the second quarter’s results were impacted by the cessation of its Australia’s printing operations, whereby the group recorded a one-off redundancy expenses of RM20.3mil and an impairment loss of machinery of RM11mil.

“Excluding the aforesaid non-recurring expense, the profit before tax for the second quarter ended June 30, 2017, would have been RM2.8mil,” it said.

TWPH announced on June 15 that in line with the group’s reorganisation of its production footprint, it had decided to cease the remaining printing business of its 51%-owned subsidiary, Anzpac Services (Australia) Pty Ltd.

Anzpac, in which TWPH acquired a stake in October 2008, incurred losses in the last two financial years.

TWPH is also in the process of ceasing its printing operation in Malaysia. It plans to transfer the production volumes to Vietnam and Indonesia to improve its strategic position to service the customer and reduce the group’s operating cost over the longer term.

Announcing this last month, the company said that employees redundancy and asset impairment costs would total about RM12.2mil.

TWPH’s major customer British American Tobacco (M) Bhd (BAT) has also announced that it would cease all its factory operations in this country by the second half of 2017, spurred by a tough domestic operating environment brought about by the growth in illicit cigarette trade.

TWPH said its outlook for 2017 remained challenging, as the tobacco industry continued to face challenges from illicit trade and anti-smoking legislations. 

“The group continues to review our current footprint, while focusing on the growth opportunities in Indonesia and Dubai. The group will also continue to identify growth opportunities in other geographical segments,” it said.

TWPH directors have declared an interim dividend of 2 sen per ordinary share in respect of the financial year ending Dec 31, 2017 (2016: interim dividend of 4 sen per share).