KUALA LUMPUR: MSM Malaysia Holdings Bhd has appealed to the government to raise the current RM2.84 per kg ceiling price of sugar by between 20 and 30 per cent, said president and group chief executive officer Mohamad Amri Sahari.
"We have put in our appeal to the Domestic Trade, Cooperatives and Consumerism Ministry (KPDNKK) to raise the ceiling price. World price for raw sugar has gone up by almost 40 per cent, and this has affected our profit margin," he told reporters at a briefing here today.
Amri noted that raw sugar is currently trading at US$0.20 per lb, versus 2015's average of US$0.15 per lb.
MSM Malaysia's third quarter profits ending Sept 2016 plunged 63.5 per cent to RM23.31 million from the RM63.87 million posted a year ago.
The company's third quarter revenue, however, rose 15.9 per cent to RM633.12 million from RM546.49 million.
"It has been very challenging, as world price for raw sugar has gone up by almost 40 per cent, and if you factor in the foreign exchange loss, that amounts to 50 per cent. We’re stumbling through global economic uncertainty," Amri said.
Despite operating in a difficult environment, MSM Malaysia is committed to paying out half of its net profits as dividends to shareholders.
"The board has approved an interim dividend of 10 sen per share," he said.
Currently, Malaysia's sugar market is that of a duopoly, with MSM Malaysia competing with Tradewinds Group.
In ensuring a steady supply of sugar in the country, enforcement officials from KPDNKK regularly visit refineries of MSM Malaysia and Tradewinds Malaysia to verify that reserves in the warehouses can last for at least 45 days.
Sugar, still considered a controlled item, is governed under the Price Control and Anti-Profiteering Act 2011. Individuals who flout this law by selling sugar above the ceiling price of RM2.84 per kg face a RM100,000 fine, or three years’ jail or both, while companies face a RM500,000 fine.
MSM Malaysia's sugar refinery in Prai is able to process 3,000 tonnes per day, while the other facility in Chuping has a daily capacity of 600 tonnes. The refined sugar is then retailed under the brand name 'Gula Prai'.
MSM Malaysia's annual refining capacity of 1.25 million tonnes is ranked within the world's Top 25.
Meanwhile, construction work on its new processing facility in Tanjung Langsat, Johor, is ongoing. When this 3,000 tonnes-per day refinery is completed in 2018, the group's capacity will almost double to 2.25 million tonnes.