Goodwill impairment on Scientex Packaging's Myanmar operations takes a bite out of earnings

KUALA LUMPUR: Scientex Packaging (Ayer Keroh) Bhd's performance in the fourth quarter of its 2023 financial year ended on a slide due to a goodwill impairment of RM22.71mil incurred for its operations in Myanmar.

The packaging producer said in filing with Bursa Malaysia it recorded a net profit of RM149,000 during the quarter under review, which was a sharp drop from RM11.35mil in the same quarter in 2022.

The group's earnings per share contracted to 0.04 sen as compared to 3.38 sen.

According to Scientex Packaging, its operating profit in 4QFY23 would have been up 46.7% year-on-year if not for the goodwill impairment, as raw material prices were softer during the quarter.

Revenue during the quarter was RM185.32mil, down 3.4% from RM191.84mil in the comparative quarter due to lower demand from its exports markets.

The board of directors declared a final dividend of 2.5 sen per share, bringing the full-year payout to five sen per share. The dividend goes ex on Jan 2, 2024, and is payable on Jan 22, 2024.

For the 12-month period, the group's net profit was RM35.94mil, down from RM43.15mil in FY22, while revenue was RM774.78mil, on a par with revenue in the previous year.

Moving forward, Scientex Packaging said it expects market conditions to remain soft in the near-term, with continued volatility in the financial and economic environment.

It added it would continue to explore operations pertaining to its Myanmar operations even as it anticipates that socioeconomic conditions in the country will remain challenging in the foreseeable short and medium term.

"While the group expects the current market conditions to continue in the near term, the group remains focused on its long-term growth strategy and is optimistic that it will be able to sustain its performance for the coming financial year," it said.