Release of Palmatone resin delayed due to purchase of machinery, amid downbeat profit reports.
Toner manufacturer Jadi Imaging Holdings Berhad has released a report of its progress through the first half of 2012, noting substantially lower profit figures and revisions for 2013 and ’14.
Attributed to Bloomberg
Entitled Operating Environment Remains Tough, Jadi states that net profit for the period “came in below our expectations” at a mere 9.8 percent of full-year projections, citing a variance of “higher-than-expected sales and margins”.
Earnings for the period saw an 83 percent reduction, a result of a 10 percent decline in sales and a “contraction in PBT margin due to high crude oil price in 1Q12”. Jadi management also stated that demand for aftermarket toners decreased in all major markets as a result of a weak global economic condition.
As a result, Jadi has adjusted its sales volume and profit margins accordingly and reduced its forecasted earnings for 2013 by 81.8 percent and 31.2 percent for 2014.
Jadi also notes that the commercialisation of its Palmatone palm-based resin, expected to have begun a trial run in Q3 2012, will be delayed further. The delay has been attributed to “the purchase of machinery in Japan” that would have eliminated expected cost savings.
Year-on-year, Jadi reports decreases across the board including a 10.3 percent decline in revenue and 48.9 in gross profit.
On predicting a potential “downside risk” of 12 percent, Jadi “reiterates” a Sell recommendation on the stock.