KUALA LUMPUR (Oct 19): Packaging services provider HPP Holdings Bhd saw its net profit fell by 46.5% year-on-year for the first quarter ended Aug 31, 2023 (1QFY2024), amid lower sales in the corrugated and non-corrugated packaging segments as well as the rigid box segment.

Net profit dropped to RM2.29 million or 0.59 sen per share for 1QFY2024, from RM4.28 million or 1.1 sen per share a year ago, according to the group’s stock exchange filing on Thursday.

HPP said sales were weaker, particularly in the consumer electrical and electronics (E&E), contraceptive and food and beverages (F&B) industries.

“The group also recorded lower sales to Mexico, Thailand and Singapore as compared to the corresponding financial quarter [last year],” it said.

Revenue declined 21% to RM19.01 million for 1QFY2024, from RM24.06 million a year ago.

Commenting on the group’s prospects, the management said the year ahead is likely to see continued inflationary pressures, an uncertain geopolitical landscape, and persistent vulnerabilities in the global supply chain weighing on the global economy.

“We will continue to broaden and deepen our product offerings and services to our customers, and pursue new business opportunities to grow our client base, across all industries, both locally and overseas,” said HPP.

“Under the current economic climate, we also take cognisance of the need for prudent credit management, cost optimisation and tight management of internal efficiencies, towards growing both our top- and bottom-line results this financial year,” it added.

The group also noted that recycling and environmental awareness had increased significantly globally, and HPP had received requests or inquiries on recyclable packaging from existing customers as they are having difficulties in sourcing it locally.

“As such, our group has expanded our product range to include paper pulp moulded packaging. Production is expected to commence by November 2023.

“The European Union-wide rule in preventing packaging waste by boosting 'reuse and refill', and making all packaging recyclable by 2030, is expected to boost demand for our group’s new product,” it said.

Shares in HPP closed one sen or 2.6% lower at 38 sen on Thursday, giving it a market capitalisation of RM147.60 million.