PSC Corporation Ltd. 1H 2025 Financial Results: Analysis & Outlook

PSC Corporation Ltd., a Singapore-listed company engaged in the supply of provisions and household consumer products as well as packaging manufacturing, has released its condensed interim financial statements for the six months ended 30 June 2025. This review analyzes the Group’s key financial metrics, performance trends, dividend policy, and business outlook as disclosed in the latest report.

Key Financial Metrics at a Glance

Performance Highlights and Trends

• Revenue: Declined 3.3% YoY to \$235.27 million, mainly due to weaker performance in the packaging business, especially in China, as a result of lower sales volume, competitive pricing, and RMB depreciation. This was partially offset by stronger consumer business sales.
• Gross Profit and Margin: Gross profit fell 5.8% to \$54.58 million and margin slipped from 23.8% to 23.2%, attributed primarily to lower selling prices in the packaging division.
• Net Profit: Decreased 16.1% to \$12.86 million, reflecting the revenue and margin pressures as well as higher distribution expenses and increased mark-to-market losses on financial assets.
• Dividend: Interim dividend per share was reduced to S\$0.002 from S\$0.005 a year ago, a 60% cut, reflecting a more cautious capital return to shareholders amid challenging business conditions.
• Net Asset Value: Remained stable at 61.63 cents per share.
• Cash Position: Cash on hand and in banks declined by \$19.9 million, mainly due to dividend payments and purchases of investment funds and equities.
• Inventories: Decreased by \$9.1 million, mainly from the Consumer Business, following a seasonal peak at year-end.
• Other Income: Rose 60.3% YoY to \$2.0 million, supported by a gain on disposal of investment property and favorable forex movements.
• Operating Cash Flow: Net cash from operations was \$3.5 million, down from \$7.7 million, as higher working capital outflows offset operating profits.
• Finance Income and Costs: Finance income fell 11.5% on lower interest rates, while finance costs jumped 44.2% due to larger mark-to-market losses on other financial assets.

Divestments and Asset Sales

• The Group completed a disposal of an investment property, which contributed to other income and reduced the carrying value of investment properties. An additional property has been classified as held for sale and is expected to fetch proceeds in excess of its book value.

Exceptional Earnings/Expenses and Asset Valuation

• Impairments: No new impairments were recognized for property, plant and equipment or intangible assets in 1H 2025, with recoverable amounts assessed to be in excess of carrying values.
• Mark-to-Market Losses: A net decrease in fair value of financial assets at fair value through profit or loss (\$661k) was recognized as an expense.

Business Outlook and Risks

• Consumer Business: Faces stiff competition from global brands and retailer house brands, with rising operational costs (labour, logistics, raw materials) and macroeconomic/geopolitical uncertainty potentially further impacting performance.
• Packaging Business: Challenged by excess industry capacity in China, intense price competition, currency depreciation, and potential increases in raw material costs. Management aims to manage credit risk, maintain a healthy financial position, and optimize operational efficiency.
• Liquidity and Strength: Despite the earnings decline, the Group maintains a positive net cash position and strong balance sheet, positioning it to weather volatility and invest in brand and product development.
• Strategic Initiatives: The Group is focusing on marketing, promotional activities, product innovation, and cost controls to navigate current headwinds. New business opportunities are actively being explored for long-term growth.

Chairman’s Statement

Consumer goods segment continues to face stiff competition from global brands and the growing presence of retailer house brands. Supermarket chains have been expanding their house brand offerings, which are competitively priced. At the same time, geopolitical tensions and rising operational costs including labour, logistics and raw materials, could further impact the Group’s performance.

To navigate this challenging environment, the Group will continue to invest in marketing and promotional activities to enhance our brand loyalty amid heightened competitions from house brands. We will also expand our product portfolio by introducing new products that align with evolving consumer preferences while implementing cost control measures to manage operating costs.

The ongoing geopolitical trade conflicts continue to weigh on the global economy and the countries that Packaging Business operates in. Excess capacity continues to dominate the corrugated packaging industry in China, exacerbating the intense price competition situation. These factors, combined with any increase in raw material costs could have a direct impact on our performance or margins. Our Packaging Business will continue to monitor the evolving situation closely. To overcome these challenges, Packaging Business remain vigilant in managing credit exposure and maintaining a healthy financial position. Management will continue to drive business performance by enhancing human capital development and executing improvement strategies in terms of cost management, enhancing operational efficiency and boosting productivity.

The Group is on robust footing with a positive net cash position and strong balance sheet. We will continue to leverage on our existing strengths such as our large stable of consumer brand assets to grow and build resilience in our core businesses. While we remain steadfast in strengthening our core businesses, we are also actively exploring new business opportunities to drive sustainable growth.

The tone is measured and cautious, acknowledging competitive and macroeconomic headwinds while emphasizing internal strengths, prudent management, and a focus on long-term sustainability.

Dividend Policy

• Interim Dividend: S\$0.002 per share for 1H 2025 (payable 19 November 2025), down from S\$0.005 per share in 1H 2024. This significant reduction reflects the Group’s more conservative approach in the current challenging environment.

Related Party Transactions and Corporate Actions

• No significant related party transactions were reported beyond standard directors’ fees and key management compensation.
• No new share buybacks, placements, or mandates. Treasury shares held steady at 4.7% of issued shares.
• No major fundraising, IPOs, or divestments aside from the property sale already disclosed.

Conclusion and Investment Recommendations

Performance Summary:
The Group delivered lower revenue, profit, and EPS in 1H 2025, pressured by weaker packaging results in China and competitive forces across its businesses. Margins contracted, and operating cash flow declined. Management responded with tighter capital returns (lower interim dividend) and a focus on balance sheet strength.

Outlook:
The outlook is neutral to slightly cautious. While the Group has a robust net cash position and is actively managing costs and innovation, business headwinds in both key segments persist—particularly in China’s packaging industry and the competitive consumer goods environment. Dividend cuts highlight management’s prudence in safeguarding liquidity amid uncertainty.

• If you are currently holding this stock: Consider maintaining your position if you value strong balance sheet companies with defensive characteristics and are comfortable with near-term earnings volatility. Monitor for stabilization or recovery in the packaging business and evidence of successful execution in product innovation and cost control. Be mindful that dividend returns are now more modest.
• If you are not currently holding this stock: Exercise patience and closely watch for signs of improvement in core segment profitability and business conditions, especially in China. Entry may be considered if valuation becomes compelling or if management demonstrates clear progress in restoring growth and margins. Conservative investors may prefer to wait for more concrete signs of earnings recovery or improved dividend outlook.

Disclaimer: This analysis is based strictly on information contained in PSC Corporation Ltd.’s published interim financial statements for 1H 2025. It does not constitute financial advice or a solicitation to buy or sell any security. Investors should consider their own financial circumstances and consult with a professional adviser before making investment decisions.

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