SINGAPORE (Feb 22): Megachem, the speciality chemical solutions provider, reported a 88.1% rise in FY17 earnings to $4.2 million on the back of higher sales and one-off valuation gain.
Revenue for FY17 rose 8.4% to $108.1 million led by commendable growth in key markets. Sales from distribution rose 9.5% to $105.5 million while sales from manufacturing fell 24.4% to $2.6 million.
In geographical terms, Asean continued to account for the largest part of Megachem’s topline at 67.5%, seeing an increase in sales of 10.2% in FY17 compared to FY16.
Europe recorded a 15.1% increase in sales and the group's efforts to grow the markets in Australia and Middle East also paid off, resulting in sales growth of 34.8% and 43.9% respectively.
Total operating expenses -- including finance cost -- increased by 8.1% in FY17 compared to FY16. This was mainly due to net foreign exchange loss and staff costs which accounted for $1.5 million of the increase.
Other income more than trebled to $2.5 million. This included a one-off valuation gain of $1.8 million following the listing of the group’s associated company on the Stock Exchange of Thailand and higher fair value gain from listed equity of $0.4 million.
In tandem with higher sales growth, profit from the group’s share of associated companies increased 46.3% to $0.82 million in FY17.
Looking ahead, Megachem says risk factors such as political uncertainties, concerns over the fragility of the Euro after Brexit, shift in trade policies and stretched financial market valuations will continue to put pressure on economic growth globally.
However, the chemical industry is also experiencing higher prices and a growing demand.
The board has recommended a final dividend of 0.7 cent per share, bringing total for FY17 to 1.2 cents.
Shares in Megachem closed at 38 cents on Thursday.
