CCM Was Reported To Have Posted Record Revenue But ...

This morning news item that caught my attention was CCM posts record revenue of RM2.2b

• Chemical Company of Malaysia Bhd (CCM) (2879) has registered a pre-tax profit of RM120.268 million for its financial year ended December 31, 2008, up from RM105.551 million the previous year.
  
  The country's largest generic pharmaceutical manufacturer set a new record of RM2.165 billion in revenue, an increase of 55 per cent from RM1.397 billion in 2007.
  
  The fertilisers division was the group’s top revenue earner last year, CCM said in a statement yesterday.
  
  The division’s revenue nearly doubled to record a 94.2 per cent increase in revenue to RM1.4 billion from RM723.8 million in the same period in 2007, it said.
  
  Pre-tax profit rose significantly by 138.4 per cent to RM83.5 million from RM35.0 million previously for the division, it added.
  
  The division’s higher performance over the previous year was achieved on the back of rising prices and improved margins in the first three quarters of 2008, which started to soften in the last quarter.
  
  The group’s chemicals division reported an 18.7 per cent growth in revenue to RM606.5 million from RM511.1 million in 2007.
  
  However, the division’s pre-tax profit at RM14.7 million was 3.1 per cent lower than the previous year due to year-end stock impairment charges incurred, reflecting market falls in product prices and underperformance of its water systems business.
  
  The pharmaceuticals division’s revenue improved seven per cent to RM232.7 million from RM217.4 million in the corresponding period the previous year.
  
  However, its pre-tax profit was 33 per cent lower at RM37.2 million from RM56.3 million previously.
  
  CCM attributed the decrease to reduced margins arising from higher raw material prices coupled with lower selling prices of products to the government sector.
  
  The CCM board has recommended a final dividend of 1.8 sen per ordinary shareless tax at 25 per cent and 4.9 sen tax exemption for the financial year ended December 31, 2008. - Bernama

Record revenue?

I am always so sceptical when I read such a headlines. More revenue does not necessary equates to more profit. This is business 101.

Here is the link to CCM's quarterly earnings Quarterly rpt on consolidated results for the financial period ended 31/12/2008

And here is the screen shot of its earnings.

Holy cow!

I am rather so disappointed on the quality of reporting from Bernama.

Despite the record revenue and what's said, the bottom line is CCM lost money for the quarter.

Why isn't this RATHER IMPORTANT FACT not stated? Who fed Bernama this set of news?

And if one takes a look inside CCM's earnings note, the company notes mentioned the following.

• Consolidated Group revenue for the fourth quarter ended 31 December 2008 increased by 34.8% over the same quarter last year driven by the fertilisers division (revenue increase of 68%) and the chemicals division (revenue increase of 20%). Consolidated Group profit before tax for the fourth quarter ended 31 December 2008 was a loss of RM 1.7 million compared to a profit of RM 33.5 million for the same quarter last year. This reversal in performance was primarily due to the impairment of year-end stocks incurred by the fertilisers and chemicals divisions arising from the sharp declines in market prices caused by the global economic crisis. The stock impairment losses were charged to cost of sales causing the gross profit margin for the quarter to drop from 14.5% last year to 7.9% in the current year.
  
  For the year ended 31 December 2008, Consolidated Group revenue crossed the two billion Ringgit mark, registering a 94.2% increase over the same period last year. The principal revenue driver was the fertilisers division, with increases in revenue also being contributed by the chemicals and pharmaceuticals divisions albeit by smaller percentage amounts. Consolidated Group profit before taxation for the year ended 31 December 2008 saw an increase of 13.9% from RM105.6 million in 2007 to RM120.3 million in 2008, despite the year-end stock impairment charges and a once-off extraordinary charge of RM15.4 million recorded in second quarter of the year representing a write-off of the residual value of the nitric acid plant which will no longer be in operation once the Shah Alam fertiliser plant is converted to a solid urea-based steam granulation process technology. Excluding the nitric acid plant write-off, the increase in the profit before taxation would have been 28.8% against the same period last year.

How?

Don't you think that the Bernama news article posted on Business Times should have at least stated the fact that CCM lost money for the quarter?

Sigh!