KUALA LUMPUR (June 19): MSM Malaysia Holdings Bhd (KL:MSM) is optimistic about sustaining its profit recovery in the financial year ending Dec 31, 2025 (FY2025) despite volatile input costs, foreign exchange challenges and the impact of dumped imported sugar on margins.

MSM group chief executive officer Syed Feizal Syed Mohammad said the group remains focused on improving operational efficiency and managing costs to support consistent earnings performance after marking a turnaround to profitability in FY2024.

“We believe that we have taken measures in the turnaround that included transformation of MSM itself,” Syed Feizal said.

“Moving forward, I believe that the path is made towards consistent performance because we have, for example, enough risk management knowledge. We have instituted certain processes and procedures to manage our input costs,” he said at a post-annual general meeting (AGM) press conference on Thursday.

A key contributor is its Johor refinery, which has ramped up operational efficiency and is now positioned to handle larger export volumes.

“Our yield now is about 94% compared to 80% last year. So, all these [including a 50% utilisation factor] will basically drive better profitability from Johor,” MSM group chief operating officer Hasni Ahmad said.

However, Hasni noted that the current utilisation rate remains about 30% at the Johor plant, which is still below the 40%-45% breakeven level, meaning that more export demand is key to optimising production.

Therefore, the country's largest sugar refiner is targeting to increase its total export volumes to 360,000 tonnes in 2025 — up from about 240,000 tonnes last year — mainly to China and Asean markets.

“China is currently sourcing from countries like (South) Korea. So, we believe we can compete against the Koreans because our refining cost is cheaper than theirs, with premium quality sugar,” Syed Faizal said.

Despite MSM’s aim to maintain positive full-year profitability, the company's quarterly earnings could remain volatile.

“We would like to have all our quarters to be in a positive position but it depends on the parameters — on the sugar price, utilisation factor, labour costs,” MSM chief financial officer Ab Aziz Ismail said.

On dividends, MSM chairman Datuk Syed Hisham Syed Wazir said any payout will depend on the group’s sustained profit improvement.

"Perhaps, by the end of 2025, we will be able to see what the results are. We have a dividend policy and we will consider it at a time,” Syed Hisham said.

MSM, the sugar arm of FGV Holdings Bhd (KL:FGV), has not announced any distribution since FY2022.

After two years of net losses, MSM returned to black with a net profit of RM31.25 million in FY2024, compared to a net loss of RM49.88 million in FY2023.

However, in the first quarter ended March 31, 2025 (1QFY2025), MSM's net profit fell by 91% to RM3.73 million, down from RM41.71 million a year earlier, no thanks to lower margins and reduced capacity utilisation despite a decrease in production costs.

Shares in MSM closed down two sen or 1.92% to RM1.02 on Thursday, valuing the group at RM717.04 million. The counter has dropped over 17% year to date.