[The Edge Daily] High polyester prices weigh on Daibochi’s earnings

18 February 2011

MELAKA: Daibochi Plastic and Packaging Industry Bhd’s net profit for the fourth quarter (4Q) ended Dec 31, 2010 fell 31% despite a rise in revenue, due to sharp increases in polyester prices.

The flexible packaging solutions provider posted net profit of RM4.16 million for 4QFY10 compared with RM6.06 million in the previous corresponding quarter.

The group said its bottom line was negatively impacted by the steep increase in cost of PET film within a short time and it was not able to raise selling prices accordingly.

Revenue, however, rose 38% to RM75.46 million from RM54.58 million previously thanks to better sales from the packaging and property development segments.

“As a mitigating measure to the escalating raw material costs, we began implementing the PET substitute for customers in the fourth quarter of FY10. This enables us to capitalise on our innovation and retain our customer base.

“Prior to this, we had successfully maneuvered the commodity crisis in 2008. This has given us the tenacity to weather the expected challenges in the current year,” managing director Thomas Lim said in a statement yesterday.

While the group is optimistic that its profitability will be sustained, it noted that the outlook remains challenging due to volatile raw material prices.

Daibochi declared a fourth interim tax exempt dividend of 3.5 sen per share, amounting to RM2.6 million which translates to 52% of group net profits in FY10.

For the full year of 2010, Daibochi made a net profit of RM18.19 million, a decline of 20% from RM22.76 million in FY09. Revenue rose 20.7% to RM267.75 million from RM221.89 million previously.

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News Room [The Edge Daily] High polyester prices weigh on Daibochi’s earnings