CCM proposes an internal reorganisation with disposal of five pharmaceutical units

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KUALA LUMPUR (Nov 27): CCM has announced an internal organisation to rationalise its pharmaceutical assets. It has proposed to dispose five of its wholly owned subsidiaries to its 73.37%-owned unit, CCM Duopharma Biotech Bhd, for RM133.33 million cash.
 
CCM Duopharma manufactures and exports pharmaceutical products and medicines. 

"As CCM Duopharma is licensed to produce pharmaceutical products to the Ministry of Health, the combined production facilities would allow it to bid for larger contracts. The rationalisation is expected to improve utilisation rate of the combined production facilities by channelling capacity of any production facility within CCM Duopharma to any under-utilised production facilities," the group said in a filing with Bursa Malaysia this evening.

Meanwhile, a separate results filing showed CCM has slipped into the red with a net loss of RM2.28 million in the third quarter ended Sept 30, 2014 (3QFY14), against a net profit of RM9.12 million in 9MFY13, due to lower sales from its fertiliser segment and more competitive pricing in its plantation sector. 

Revenue for the quarter declined 15% to RM263.67 million from RM311.47 million. Nevertheless, the company has still declared an interim dividend of 2.5 sen per share for the period, to be paid next Jan 15.
 
For the cumulative nine months to Sept 30, 2014 (9MFY14), CCM saw its net profit plunge 80% to RM3.61 million from RM17.82 million in 9MFY14, while revenue slumped 15% to RM848.54 million from RM995.03 million, its filing to the local bourse this evening showed.

The group noted though that its 3QFY13's profit included recognition of change in fair value of investment properties of RM13.1 million, while its 9MFY13 financials comprised RM16.8 million of change in fair value adjustments of investment properties.
 
Meanwhile, the group's 3QFY13 pharmaceutical division recorded a 17% increase in pre-tax profit to RM7.84 million from RM6.71 million in 3QFY13 on improved margin of its ethical, over-the-counter drugs and private market.
 
Its chemicals division also registered a 24% increase in pre-tax profit of RM3.5 million from RM2.83 million previously, thanks to consolidation exercise that resulted in lower operating expenses and high-margin product group.
 
As for its fertiliser segment, pre-tax loss has narrowed 30% to RM6.8 million from RM9.78 million in 3QFY14, due to lower finance and operating expenses, coupled with a slight improvement in margins.
 
Going forward, CCM expects its performance for the financial year ended Dec 31, 2014 (FY14) to be challenging.
 
"The Group will continue to focus on enhancing business profitability by increasing sales growth domestically and regionally, improving production efficiency and cost effectiveness across all of its business divisions," it said.
 
CCM's shares have fallen 11.38% from RM1.23 on Aug 7 to close at RM1.09 today, giving it a market capitalisation of RM495.5 million.
The group is backed by two institutional funds; Permodalan Nasional Bhd has a 71.35% stake, while pilgrim fund Lembaga Tabung Haji holds a 5.07% interest.