KUALA LUMPUR (Feb 27): Mega First Corp Bhd (MFCB) posted a 55.28% decline in its net profit to RM95.17 million for the fourth quarter ended Dec 31, 2022 (4QFY2022) against RM212.81 million a year earlier in the absence of a one-off unallocated gain from a business acquisition.

This was despite quarterly revenue rising 29.66% to RM363.86 million from RM280.62 million in 4QFY2021 as all its core divisions reported double-digit growth.

In a bourse filing, MFCB said its share of loss in joint ventures or associates widened to RM4.6 million compared with RM3.1 million in 4QFY2021, primarily from share of loss in its 50%-owned oleochemicals joint venture unit Edenor Technology Sdn Bhd.

The RM3.1 million loss in 4QFY2021 excludes unallocated bargain gain, said the group on Monday (Feb 27).

“During the current quarter [under review], production at Edenor was disrupted several times by service, repair and/or upgrading works amidst a soft market, stiffened competition and an unfavourable raw material price trend,” MFCB said.

“Excluding the RM125.1 million one-off unallocated bargain gain arising from the acquisition of Emery’s oleochemical business in Malaysia by Edenor in 4QFY2021, pre-tax profit grew marginally by 1.4% to RM117.5 million as the 4% earnings improvement in the renewable division was offset by lower profit contribution from the resources and packaging divisions,” it added.

According to the group, its renewable energy division recorded a 10.2% increase in revenue to RM161.6 million in the quarter under review, bolstered by 9.2% currency gain and 1% hydro tariff adjustment on Oct 1, 2022.

“[Meanwhile], the packaging division and the resources division grew 17.6% to RM98.9 million and 15.6% to RM50.1 million, respectively,” it noted.

Investment holding and other divisions, on the other hand, reported a substantial increase in revenue from RM6.5 million to RM53.3 million, primarily due to RM45.3 million contribution from the Tawau power plant which recommenced commercial operations in May 2022.

For the full financial year ended Dec 31, 2022, MFCB’s net profit declined 14.17% to RM396.8 million from RM462.33 million although revenue climbed 46.46% to RM1.34 billion from RM914.67 million.

Despite challenges posed by rising interest rates, a higher operating cost environment, industry-wide inventory and capacity excesses and a generally soft consumer market, MFCB said it is optimistic that its overall recurrent earnings will improve further in 2023.

Over the next two years, it said, Edenor is expected to improve its manufacturing process reliability, upgrade the quality of its workforce, strengthen its distribution and agency network as well as broaden its speciality range.

“Excluding the RM16.9 million bargain gain in 2022, we expect contribution from the share of profit and loss in joint ventures and associates to improve in 2023 (2022: RM1.2 million loss),” it said.

“Management will also endeavour to minimise capacity loss from plant refurbishment and upgrading works by staggering and coinciding the works as much as possible with the plant maintenance schedule. These steps are expected to yield positive results progressively as they are implemented,” the group added.

Shares of MFCB closed down two sen or 0.54% at RM3.68 on Monday, valuing the group at RM3.64 billion.