KUALA LUMPUR (Oct 17): Ancom Nylex Bhd (KL:ANCOMNY) reported a 36.5% decline in its net profit for the first financial quarter ended Aug 31, 2024 (1QFY2025), as its agricultural chemicals business was affected by higher freight costs arising from geopolitical conflicts.

Net profit for the quarter fell to RM13.21 million or 1.41 sen per share, compared with RM20.80 million or 2.20 sen per share over the same period last year, Ancom Nylex's bourse filing on Thursday showed.

This came despite revenue rising 5.8% year-on-year to RM515.54 million from RM487.36 million.

The company declared a first interim dividend in the form of a distribution of treasury shares, offering four treasury shares for every 100 shares held.

Ancom Nylex managing director and group chief executive officer Datuk Lee Cheun Wei said the 1QFY2025 performance was "rather soft" as the agricultural chemicals segment was affected by geopolitical instability.

"Geopolitical uncertainty remains elevated, exacerbated by armed conflicts and trade tensions in numerous parts of the world," Lee said. Hence, global supply chains are being reshuffled as producers adapt to mitigate geopolitical risk, often at higher costs, he said.

"Separately, the Middle Eastern conflict has caused seaborne trade to be rerouted, causing shipping delays and snarled travel. Nevertheless, freight costs have somewhat moderated and we hope that it is a sign that it has peaked,” he added.

During 1QFY2025, Ancom Nylex saw revenue growth across its investment holdings, industrial chemicals and logistics segments, driven by higher selling prices and sales volumes, as well as savings from the rationalisation of operating expenses.

However, these gains were offset by challenges in its agricultural chemicals segment, which faced increased freight costs due to the geopolitical instability and US sanctions on Chinese imports.

"We continue to make good headway for our new active ingredient as well as our current products penetrating into new crops for the existing markets. We remain focused and steadfast in executing our growth plans,” Lee said.

On the corporate front, Lee said the recent entry of HELM AG as a substantial shareholder has strengthened the company’s shareholder mix and offers potential synergies.

"We also see strong synergies as they are one of the world's major independent chemicals marketing and distribution company with a very formidable crop solutions business," he added.

Ancom Nylex’s shares closed one sen or 0.99% lower to RM1 on Thursday, valuing the company at RM1.07 billion. Year-to-date, the stock has declined 7.41%.