Daibochi’s sustainable packaging solutions gain momentum

Daibochi’s sustainable packaging solutions gain momentum

10 Mar 2021

DaibochiBhd is gaining momentum in the adoption of its sustainable polypropylene-based mono-material laminate packaging by major customers comprising multinational companies (MNCs) and prominent domestic brands in the past year, reinforcing its product development capabilities in this area.

In its second-quarter ended Jan 31, 2021 (2Q21), Daibochi’s MNC client adopted the group’s mono-material laminate structure for two of its popular food and beverage (F&B) consumer brands.

This follows on the heels of similar adoptions of mono-material laminates by several MNCs in the financial year ended July 31, 2020 (FY20), comprising various F&B packaging formats such as pouches, sachets, stickpacks and bar wrappers.

“The increasing adoption of our sustainable flexible plastic packaging (FPP) is a promising milestone for Daibochi, as MNCs and prominent domestic brands lead the charge in accelerating the industry shift towards sustainable packaging solutions,” said ED Low Jin Wei.

He added that Daibochi is on track with its current capital expenditure programme from FY19 to FY21 to expand production capabilities and packaging formats.

“We also commissioned new bag-making machines to serve the pet food market in 2Q21, with expanded capacity for stand-up and flat-bottom pouch that would expand our product portfolio for our current and future clientele,” he added.

Daibochi’s operation in 2Q21 faced heightened raw material prices in addition to a surge in freight costs due to volatile global conditions.

“That said, we can mitigate a substantial portion of these cost hikes as we have cost passed-through mechanisms with key MNC clients.

“We are also able to leverage on Scientex Bhd’s substantial access to the global resin market, thus ensuring a stable supply of raw materials for our production,” said Low.

Yesterday, Daibochi posted a net profit of RM15.1 million in 2Q21 from RM14.6 million previously.

Revenue for the same quarter stood at RM161.3 million, an increase of 1.5% from RM159 million in the preceding year’s corresponding quarter.

Sales from the domestic market, which made up RM90 million or 55.8% of group revenue, increased 2.3% from RM87.9 million previously.

Exports constituted the balance RM71.4 million or 44.2% of group revenue, compared to RM71 million previously.

While group revenue remained robust, operating profit, however, reduced 22.1% to RM16.5 million in 2Q21 from RM21.2 million previously, due to higher raw material prices and surge in freight costs experienced during the quarter.

Meanwhile, for the first half of FY21 (1H21), group revenue amounted to RM318 million, largely unchanged from RM311.5 million previously on resilient sales amid the dampened economic environment.

FPP sales in Malaysia, which made up RM178.5 million or 56.1% of group revenue, increased 3.7%

from RM172.2 million previously. Exports, constituting the balance RM139.6 million or 43.9% of group revenue, maintained unchanged.

For 1H21, operating profit was, however, 9.5% lower at RM34.1 million compared to RM37.7 million previously, due to the impact of higher raw material prices and freight costs in 2Q21.

Despite the lower operating profit, 1H21 net profit attributable to shareholders jumped 8.9% to RM27.9 million from RM25.6 million a year ago.

Daibochi also reported that its manufacturing operations in Yangon, Myanmar, endured sporadic halt in operations due to the uncertainties in socioeconomic and political climate in February 2021.

The group will continue to monitor the situation in Myanmar.

Source: The Malaysian Reserve