Medtecs International has reported yet another year of losses for its 1HFY2023 ended in June, amounting to US$5.8 million ($7.86 million), a 47.9% decrease from the US$3.9 million loss in the same period a year before.
The group has said that this is due to lower sales from the global decline in demand for personal protective equipment (PPE), facemasks and other products from stockpiling projects, which has affected its profits across all segments of its business.
This puts the group’s earnings per share at a greater loss of 0.983 US cents, a higher figure from the 0.678 US cents a year before.
Medtecs revenue decreased by 16.0% from US$31.6 million in 1HFY2022 to US$26.5 million in 1HFY2023. Despite a continued decline in revenues, the group says that it sees improvement from its regular original equipment manufacturer (OEM) customers and sales from its new product offering – nitrile gloves.
The group’s gross profit decreased by 49.7% from US$8.5 million in 1HFY2022 to US$4.3 million in 1HFY2023.
Gross profit from the manufacturing division decreased by 53.7% from US$6.4 million in 1HFY2022 to US$3.0 million in 1HFY2023 due to decline in high-margin e-commerce sales, fewer stockpiling projects and inventory provisions for the period.
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Gross profit from the Trading and Distribution division decreased by 78.2% from US$1.1 million in 1H2022 to US$249,000 in 1H2023 due to decline in demand for healthcare products in the domestic market.
Meanwhile, other operating income increased by 119.1% from US$440,000 in 1HFY2022 to US$964,000 in 1HFY2022 primarily due to gain on sale of fixed assets and foreign exchange gains arising from recovery of non-USD denominated foreign currencies during the period.
Medtecs’ total assets decreased slightly from US$182.0 million as at Dec 31, 2022 to US$181.7 million as at June 30, 2023 due to net cash spending for the purchase of glove materials less collections received from stockpiling projects, partially offset by increase in stocks from the glove factory.
The group’s bank loans increased by US$5.0 million to US$20.6 million from US$15.6 million as at Dec 31, 2022, due to additional borrowings during the period for working capital of the group.
The cash inflow of US$4.2 million from financing activities in 1HFY2023 was due to higher loan availments, net of payment of interest and lease.
In its financial report dated Aug 13, the group says that it is “fully aware of moderating pandemic demand and other near-term headwinds in certain product categories”.
It will therefore refocus its resources on servicing its current OEM customers, as they are seeing gradual growth in orders, and also further drive its e-commerce strategy through direct business-to-consumer engagement and open up expanded sales channels for our products.
Medtecs has completed its fully integrated nitrile glove facility in Cambodia, and is trying to leverage its manufacturing presence in the Philippines to secure stockpiling contracts with the government for uniforms.
It is also exploring a collaboration with a North American Group Purchasing Organization that could introduce procurement models to the Philippines healthcare system, but is still in preliminary discussions with no formal agreements.
Shares in Medtec closed at 0.2 cents up, or 1.52% higher at 13 cents.
