Higher fertiliser prices boost Hextar’s results

PETALING JAYA: Hextar Industries Bhd expects food commodity prices and demand to increase in the long run, due to its importance to livelihood and food security.

Group managing director Benny Ang said geopolitical tensions resulting from the Russia-Ukraine war, as well as sanctions and restrictions to export have led to the increase in the price of fertiliser across the globe.

“Despite crude palm oil prices declining from the peak of RM8,000 per tonne recorded in the first half of 2022, food commodity prices and demand are still likely to increase,” he said in a statement yesterday.

For its fourth quarter ended Aug 31, 2022, Hextar’s net profit rose to RM3.09mil from RM232,000 in the previous corresponding period, while revenue grew to RM61.40mil from RM29.96mil a year earlier.

Earnings per share stood at 0.27 sen, compared with 0.10 sen previously.

In a filing with Bursa Malaysia yesterday, Hextar said the increase in revenue and profit was mainly attributed to higher average selling prices within its fertiliser division, as well as the recovery of its heavy equipment and equipment rental divisions following the lifting of the enhanced movement control order.

Ang said the recent proposed acquisition of Hextar Fertilizers Ltd Group represented a strategic initiative to enhance the group’s competitiveness.

“Upon the completion of the acquisition, we will have access to an immediate distribution network and manufacturing facilities within Peninsular Malaysia and Sabah and Sarawak (particularly Sabah).

“Our annual capacity of compound fertilisers will also increase by approximately eight times from the existing 75,000 tonnes to 679,000 tonnes.”

Ang said the company’s strategy to expand the core fertiliser business beyond its current primary market in Sarawak, together with the recovery of the heavy equipment and equipment rental divisions, will enable Hextar to grow significantly.

For its financial year ended Aug 31, 2022, Hextar’s net profit rose to RM8.86mil from RM1.64mil in the previous corresponding period, while revenue increased to RM257.82mil from RM123.04mil previously.

The company said the increase in revenue was mainly attributable to higher demand and selling prices of fertilisers and business recovery from the Covid-19 pandemic.

Additionally, Hextar said its heavy equipment was widely used to support the operations of mining and quarrying activities in Malaysia.

“As products from quarries and mines are commonly used as building materials in the construction industry, the availability and growth in infrastructure development in Malaysia will drive the growth of mining and quarrying activities.”

As the construction work for, among others, the Light Rail Transit 3, Mass Rapid Transit 2, Pan Borneo Highway, Gemas-Johor Bahru Electrified Double Tracking Project and Klang Valley Double Tracking projects progress, it may drive the growth of mining and quarrying activities, which in turn, may drive the demand for heavy equipment.”