KNM’s 3Q earnings up 60% on higher exchange gain and cost savings

KUALA LUMPUR (Nov 25): KNM Group Bhd’s net profit rose 60.21% to RM17.98 million in the third quarter ended Sept 30, 2020 (3QFY20) from RM11.22 million in the preceding quarter, mainly due to a higher unrealised exchange gain, gain on disposal of a non-profitable business unit in China, and cost savings from operations.

Earnings per share rose to 0.68 sen from 0.43 sen in 2QFY20, the group’s bourse filing showed.

Revenue fell 3.52% to RM321.32 million from RM333.03 million, mainly due to a drop in ethanol production in Thailand’s operations.

On a year-on-year basis, KNM's net profit surged 70.27% from RM10.56 million in 3QFY19, while revenue fell 28.26% from RM447.88 million.

For the nine months ended Sept 30, KNM's net profit came in 35.51% higher at RM49.46 million versus RM36.5 million in the prior year period, on lower finance costs as total borrowings were reduced to RM1.36 billion as at Sept 30 from RM1.51 billion a year ago.

Nine-month revenue stood at RM990.91 million, down 16.47% from RM1.19 billion a year earlier.

KNM attributed the  lower cumulative revenue to the temporary closure of the fabrication plants in China and Malaysia amid the Covid-19 lockdown compliances and reduction in ethanol production in Thailand’s operations coupled with completion of a major Chinese project by Europe’s operations in the third quarter of 2019.

KNM anticipates that the outlook for this year to remain challenging due to the continuous uncertainties in the global economy outlook and impact of the pandemic.

KNM’s share price closed up 1.5 sen or 7.69% at 21 sen today, valuing the group at RM621.83 million. Some 180.34 million shares were traded, making it ninth-most actively-traded stock on Bursa Malaysia.

Year to date, the stock has fallen 71% from 36 sen on Jan 2.