Rhone Ma warns of possible profit shortfall for next year

PETALING JAYA: Rhone Ma Holdings Bhd warned of a potential shortfall in revenue and profit next year, after a major supplier Merial amended an initial distribution agreement signed between its unit and Merial to exclude swine, poultry, ruminant and veterinary public health products.
The group’s share price was down 9.5 sen to close at a low of 77.5 sen since listing, with some 1.88 million shares changing hands on the news. The group listed its shares at 75 sen a piece just shy of one year ago.
Rhone Ma Malaysia Sdn Bhd (RMM) is the distributor of Merial products comprising products for swine, poultry, ruminant and companion animals as well as veterinary public health products. The amended distribution agreement will see RMM only distributing Merial companion animal products.
Rhone Ma said the excluded products contributed about 31.54% and 47.7% of the total revenue and profit before taxation (excluding the one-off charge of listing expenses which amounted to RM4.14 million) of the group for the financial year ended Dec 31, 2016. The group made a net profit of RM9.17 million against RM119.20 million revenue for the financial year 2016.
The board however said that the negative financial impact would be mitigated by exploring options with other major international suppliers of animal health products for the distribution of their products for poultry, swine and ruminants; increasing efforts to market and sell other products particularly the in-house manufactured products and expanding market share in regional markets which have growth potential.
The group also anticipates that upon the completion and operation of its new warehouse and GMP-compliant plant, it will be able to increase the volume of production and sales of its own animal health products.
Rhone Ma made a net profit of RM10.34 million for the nine-month period ended Sept 30, 2017, against RM101.29 million revenue.