Rising raw material, freight costs hurt Daibochi earnings

KUALA LUMPUR: Packaging firm Daibochi said its operating profit in the second quarter ended Jan 31 was impacted by rising raw material prices and freight cost.

Net profit, however, improved slightly to RM15mil from RM14.6mil a year ago.

Revenue was steady at RM161mil, the company said in a Bursa Malaysia filing today.

"As flexible plastic packaging (FPP) solutions are also deemed as essential components in the essential food and beverages packaging supply chain, this has allowed the Group to maintain resilient performance in the current financial period," it said.

The domestic market contributed 56% to group's revenue.

In second quarter, Daibochi has commissioned two new bag making machines primarily to serve the pet food market, with expanded capacity in packaging formats such as stand up and flat bottom pouch.

"Furthermore, the Group’s pursuits in developing sustainable, fully-recyclable FPP solutions jointly with Scientex have continued to gain traction, as major customers comprising multinational corporation (MNCs) and prominent domestic brands have gradually adopted its polypropylene (PP) based mono-material laminates since FY2020," it said.

Daibochi is a subsidiary of Scientex Bhd.

Looking forward, Daibochi said its domestic and export businesses remained resilient to date, and had not experienced any major impact to production or supply chain.

"However, there was an increase in freight costs due to global shortage of shipping containers and rising raw materials prices, which the Group continues to manage prudently," it added.

Meanwhile, the Group’s manufacturing operations in Yangon, Myanmar endured sporadic halt in operations due to the uncertainties in Myanmar’s socioeconomic and political climate following developments in February 2021.

"The Group would continue to monitor the situation in Myanmar," it said.