Davis Commodities Limited (Nasdaq: DTCK) (“Davis Commodities”), a leading agricultural commodity trading company specializing in sugar, rice, and oil and fat products, has announced its financial results for the fiscal year ending December 31, 2023.
Ms. Li Peng Leck, Executive Chairwoman and Executive Director, stated, “I’m pleased to present our fiscal year 2023 financial results. We maintained profitability across our product lines, with notable revenue growth in oil and fat products, which increased by 171.0% compared to last year. Despite challenges like reduced sugar demand in Indonesia and Vietnam, we saw revenue growth in Africa, the Philippines, Thailand, and Singapore. These results reflect the robustness of our business strategies amidst geopolitical, policy, and economic uncertainties. We are optimistic about our prospects, supported by our strategic planning and adaptability to changing macroeconomic conditions. Moving forward, we aim to expand our distribution channels and strengthen our market presence, leveraging strong relationships with our business partners to seize opportunities in emerging markets with high product demand. We believe these efforts will yield sustainable returns and increased shareholder value.”
Fiscal Year 2023 Highlights:
- Sugar Sales: Revenue decreased by 24.7% to US$116.4 million due to lower demand in Southeast Asia and India’s sugar export ban.
- Rice Sales: Revenue fell by 22.7% to US$26.4 million, impacted by India’s rice export ban. The company is exploring alternative sourcing options.
- Oil and Fat Products: Revenue soared by 171.0% to US$47.6 million, driven by increased palm oil prices and demand.
- Other Products: Revenue was US$0.2 million from occasional sales of tomato puree and creamer.
Regional Performance:
- Africa: Revenue grew by 41.8%, contributing 42.3% to total revenue, boosted by oil and fat product sales.
- China: Revenue increased by 6.6%, thanks to successful liquid sugar sales.
- Indonesia: Revenue declined by 71.7%, due to difficulties in securing sugar import tenders.
- Vietnam: Revenue dropped by 68.2%, due to government-imposed duties and quota restrictions on imported sugar.
- Philippines: Revenue surged by 499.0%, driven by expanded industrial capacity and government-issued sugar import permits.
- Thailand: Revenue increased by 562.6%, due to EPZ factory expansion for the Chinese market, facilitated by the FTA between Thailand and China.
- Singapore: Revenue grew by 114.5%, reflecting increased capacity and acceptance of the company’s sugar brand.
- Other Countries: Revenue decreased by 14.0% due to mixed performances across various markets.
Financial Overview:
- Cost of Revenue: Decreased by 5.2% to US$183.7 million, correlating with reduced demand for products other than oil and fat products.
- Gross Profit: Declined by 45.4% to US$7.0 million.
- Gross Margin: Fell to 3.7% from 6.2% due to procurement and pricing pressures and rising supply chain costs.
- Operating Expenses: Decreased by 22.5% to US$5.9 million.
- Selling and Marketing Expenses: Dropped by 54.7% to US$2.4 million.
- General and Administrative Expenses: Increased by 47.8% to US$3.4 million.
- Other Income: Decreased by 30.5% to US$0.2 million.
- Interest Expense: Rose by 233.3% to US$110,000 due to higher bank borrowings.
- Profit Before Tax: Decreased by 77.7% to US$1.2 million.
- Net Income: Declined by 76.5% to US$1.1 million.
- Earnings Per Share: Basic and diluted earnings were US$0.04, down from US$0.20.
Financial Position:
- Cash and Cash Equivalents: Stood at US$1.3 million as of December 31, 2023, down from US$2.5 million the previous year.
- Operating Activities: Net cash generated was US$1.8 million, a turnaround from US$1.9 million used in the previous year, due to inventory reductions and lower tax payables.
- Investing Activities: Net cash used was US$208,000, primarily for capital expenditures.
- Financing Activities: Net cash used was US$2.8 million, with proceeds from an offering and finance leases offset by loan repayments.
Davis Commodities remains committed to leveraging its strategic relationships and market presence to drive growth and create value for shareholders amidst evolving market conditions.
