KUALA LUMPUR: Conglomerate Cahya Mata Sarawak Bhd (CMS) has flagged the strengthening of the US dollar against the ringgit as a key concern for financial year 2024 (FY24), after it posted an almost 60 per cent drop in net profit in FY23.
CMS' net profit reduced to RM115.13 million from RM287.13 million, in the absence of a one-off gain of RM197.78 million in FY2022 and also due to a 55 per cent drop in profit contributions from associates compared with RM139.11 million in financial year 2022.
This was despite a 20 per cent jump in revenue to RM1.2 billion for the year ended Dec 31 2023 in comparison to the preceding year's of RM1.0 billion.
Fourth quarter net profit rose to RM36.25 million from RM21.18 million a year prior, on foreign exchange gains recognised in the quarter.
Revenue for the quarter ended Dec 31, 2023 increased to RM332.65 million from RM308.4 million posted a year ago.
CMS said in its filing with Bursa Malaysia Securities Bhd that the group's performance for the year ended Dec 31, 2023 was largely in line with its expectations with the exception of the phosphates division where commercialisation of the plant was deferred.
"The key challenges and headwinds for 2024 are US dollar/ringgit exchange rate which are at historical highs and the outcome of the ongoing arbitration for Cahya Mata Phosphates. Aside from these challenges and barring any other unforeseen circumstances, the group is cautiously optimistic of the prospects for 2024," CMS said
It said it will continue to remain resilient and focus on realising its full growth potential, leveraging on its healthy balance sheet and diverse portfolio of businesses.
"As we progressively improve our strategy, aligning our business to growth and value opportunities, we will continue to pursue cost optimisation activities within the group to drive operational efficiency and optimise profit margin," CMS said.
CMS's cement division reported 13 per cent higher revenue of RM681.69 million and 82 per cent higher profit before tax (PBT) of RM146.04 million in FY23, due to the increase in sales of cement and improvement in gross profit margin due to lower input costs.
However the group was impacted by losses at the phosphate anfd property development divisions.
Loss before tax of RM156.70 million was recorded for FY2023, higher than FY2022's net loss of RM61.31 million. FY2022 was in the construction phase with most of cost incurred in FY2022 being capitalised. For FY2023, the commissioning and finance related costs incurred were recognised in the statement of comprehensive income.
The property development division reported a loss before tax of RM2.22 million in 2023 compared with a PBT of RM33.17 million in 2022 mainly due to slower sales of properties and no land sales in 2023.
CMS' stock was up 3.59 per cent to RM1.01 as at 9.35am, giving it a market capitalisation of RM1.08 billion.
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