Davis Commodities Limited (Nasdaq: DTCK) (“Davis Commodities” or the “Company”), a leading agricultural commodity trading firm specializing in sugar, rice, and oil and fat products, has announced its unaudited financial results for the six months ending June 30, 2024.
Management Commentary
Ms. Li Peng Leck, Executive Chairperson and Executive Director, stated:
“Our performance reflects fluctuations in commodity prices and shipping costs, which we see as temporary challenges. Leveraging our robust logistics supply chain, we aim to mitigate these impacts. Expanding into new markets while strengthening existing ones is key to reducing regional risks. Additionally, we plan to capitalize on opportunities in emerging markets through our strong partnerships.”
First Half 2024 Financial Highlights
- Revenue: $66.9 million, down 31.6% from $97.8 million year-over-year.
- Gross Profit: $2.9 million, a 31.0% decline from $4.2 million year-over-year.
- Income from Operations: $1.1 million, a 50.0% drop from $2.2 million year-over-year.
- Net Income: $1.3 million, a 35.0% decrease from $2.0 million year-over-year.
- Earnings Per Share (Basic and Diluted): $0.05, down from $0.08 year-over-year.
Revenue Breakdown
- Sugar Sales: $44.9 million, a 9.1% decline, affected by pricing challenges in Indonesia and higher import costs in Vietnam.
- Rice Sales: $14.0 million, a 37.9% increase driven by strong demand in African markets.
- Oil and Fat Products: $8.0 million, down 78.9% due to fluctuating palm oil prices.
- Other Products: No revenue, compared to $0.2 million in the prior year.
Regional Market Trends
- Africa: Revenue fell 18.5% due to decreased demand for rice and oil products.
- China: A 51.3% revenue drop as local importers shifted to domestic markets.
- Indonesia: No sugar revenue due to unawarded tenders.
- Vietnam: Revenue grew 15.3%, driven by demand for premixed sugar.
Cost and Profitability
- Cost of Revenue: $64.0 million, a 31.6% decrease, reflecting lower demand.
- Gross Margin: Improved slightly to 4.4% from 4.3% year-over-year.
- Operating Expenses: $1.8 million, a 10.0% decline, primarily due to reduced sales commissions.
Other Financial Metrics
- Other Income: $0.6 million, up 200.0% due to government grants, interest income, and a reversal of impairment loss.
- Interest Expense: $0.09 million, a 350.0% increase due to additional borrowings and finance leases.
Cash Flow and Financial Position
- Cash and Cash Equivalents: $1.4 million as of June 30, 2024, compared to $1.3 million as of December 31, 2023.
- Operating Cash Flow: Net inflow of $0.2 million, supported by adjustments in non-cash items and asset reductions.
- Investing Activities: Net outflow of $0.005 million for equipment purchases.
- Financing Activities: Net outflow of $0.2 million due to loan repayments and lease payments.
Conclusion
Despite challenges from volatile commodity markets and regulatory shifts, Davis Commodities remains focused on mitigating risks through its supply chain, expanding market presence, and leveraging strong business partnerships to drive growth in emerging markets.
