Financial Results Davis Commodities Limited Reports Fiscal Year 2024 Performance
Davis Commodities Limited (Nasdaq: DTCK) (“Davis Commodities” or the “Company”), a well-established agricultural commodity trading company focused on the global trade of sugar, rice, and oil and fat products, today released its audited financial results for the fiscal year ended December 31, 2024.
Despite ongoing challenges in the global commodities market, including persistent price volatility and elevated shipping costs, the Company maintained its strategic course and emphasized long-term growth through market diversification and operational adaptability.
Executive Commentary
Ms. Li Peng Leck, Executive Chairperson and Executive Director of Davis Commodities, provided an optimistic outlook, highlighting the Company’s proactive measures and strategic planning in the face of economic headwinds.
“Despite the challenges posed by fluctuations in commodity prices and shipping costs, we remain confident in our ability to navigate these temporary headwinds,” said Ms. Leck. “Our robust logistics supply chain is designed to mitigate the impact of such fluctuations, ensuring a steady flow of operations. Looking ahead, we are committed to expanding our market presence by strengthening our position in existing markets and exploring opportunities in new territories. This strategic approach not only supports growth but also helps diversify regional risks. Furthermore, by leveraging our longstanding relationships with trusted business partners, we aim to seize opportunities in emerging markets, driving long-term value and resilience.”
Cost of Revenue
For the year ended December 31, 2024, the Company reported a significant reduction in its cost of revenue. Total cost of revenue declined by approximately $53.7 million, or 29.2%, to approximately $130.0 million, compared to approximately $183.7 million for the same period in 2023. This reduction was attributed to a broad decrease in costs across all major product categories, driven by lower sales volumes, changes in product mix, and more favorable raw material prices.
Specifically, the cost of sugar sales declined by $27.7 million, or 24.5%. The cost associated with rice products fell by $6.7 million, representing a 26.6% decrease, while oil and fat product costs decreased by $19.4 million, or 43.0%. The only category to see an increase was “Other Products,” such as creamer and tomato puree, where costs rose slightly by $0.4 million in line with higher sales volume in that segment.
Gross Profit and Gross Margin
While the Company succeeded in lowering its overall cost of revenue, gross profit was adversely impacted due to lower sales volumes and tighter pricing conditions. Gross profit for fiscal year 2024 fell by $4.7 million, or 66.9%, totaling approximately $2.3 million, compared to approximately $7.0 million in 2023.
Gross margin for the year declined significantly, from 3.7% in 2023 to 1.8% in 2024. This margin contraction was primarily the result of reduced pricing flexibility and elevated input costs, stemming from commodity price swings and disruptions in the supply chain.
Other Income and Interest Expense
Other income rose markedly during the year, reaching approximately $0.5 million—a 143.4% increase compared to $0.2 million in 2023. The uptick was primarily due to higher interest income earned from a related party, reflecting a strategic shift in cash management and internal financing operations.
Conversely, interest expense saw a modest increase of $0.023 million, or 20.9%, climbing to approximately $0.13 million in 2024 from $0.11 million in 2023. This rise in interest expenses was mainly driven by the full-year accrual of interest on borrowings from a related party, which only began accruing mid-year in 2023. Additionally, the Company acquired a motor vehicle under a finance lease arrangement during 2023, which also contributed to higher interest expenses in 2024.
Net Income and Loss
Due to the combined effects of reduced gross profit and increased operating and financial expenses, Davis Commodities reported a net loss of approximately $3.5 million for the fiscal year ended December 31, 2024. This compares to a net income of approximately $1.1 million in 2023 and a net income of $4.6 million in 2022, reflecting the challenging macroeconomic environment and fluctuating commodity markets.
Financial Condition and Liquidity
As of December 31, 2024, the Company had cash and cash equivalents of $0.68 million, a decrease from $1.3 million at the end of 2023. The Company’s liquidity position reflects the strategic allocation of cash to operational requirements and working capital management during the year.
Cash Flows
- Net cash used in operating activities totaled approximately $0.8 million. This figure primarily reflects the reported net loss of $3.5 million. However, the operating cash outflows were partially offset by non-cash items such as depreciation, unrealized losses on derivative contracts, credit loss allowances totaling approximately $0.3 million, and interest expenses of around $0.1 million. A significant positive adjustment came from a decrease in accounts receivable of $9.4 million. These cash inflows were offset by a decrease in accounts payable, accruals, and other payables of approximately $6.2 million, as well as reductions in income tax payable and lease liabilities amounting to $0.7 million. An increase in margin deposits of $0.04 million also contributed to the net cash outflow.
- Net cash used in investing activities amounted to approximately $0.01 million, primarily representing minimal capital expenditures for administrative and operational necessities.
- Net cash provided by financing activities stood at approximately $0.1 million. The Company received advances of $0.5 million from a related party, which helped support its working capital needs. These inflows were partially offset by repayments of $0.2 million in bank borrowings, $0.03 million in finance lease liabilities, and approximately $0.09 million in interest payments.
