Luxchem Corporation Berhad Reports Strong Q1 2026 Results: Profit Growth Despite Revenue Drop, Major Acquisition, and Strategic Outlook

KUALA LUMPUR, 23 April 2026 – Luxchem Corporation Berhad (“Luxchem” or “the Group”) has announced its unaudited financial results for the first quarter ended 31 March 2026, revealing a robust increase in profitability despite a dip in revenue, as well as a significant acquisition and continued investment in future growth. The Group’s performance and recent developments offer key insights for investors and may influence the company’s share price in the near term.

Key Financial Highlights

• Revenue: RM177.17 million, a decrease of 7% year-on-year (Q1 2025: RM190.07 million).
• Profit Before Tax: RM20.89 million, up 24% year-on-year (Q1 2025: RM16.87 million).
• Profit After Tax: RM16.06 million, up 29% year-on-year (Q1 2025: RM12.45 million).
• Basic Earnings Per Share: 1.24 sen (Q1 2025: 0.99 sen).
• Net Assets Per Share: RM0.55.

While revenue contracted due to lower trading segment sales, this was offset by a significant increase in manufacturing segment revenue (up 19% to RM82.64 million). The Group’s focus on manufacturing activities has driven higher margins and overall profitability, with profit before tax in manufacturing surging 30% year-on-year. Trading segment profits also increased by 5% despite the revenue drop, reflecting improved cost control and operational efficiencies.

Major Corporate Development: Acquisition of Kazox Materials Sdn Bhd

• On 22 January 2026, Luxchem’s wholly-owned subsidiary, Transform Master Sdn Bhd, completed the acquisition of 100% equity in Kazox Materials Sdn Bhd for RM3.79 million.
• Kazox is involved in the manufacturing and trading of zinc oxide, a strategic fit for Luxchem’s chemical distribution and manufacturing portfolio.
• The financial results of Kazox have been consolidated from the date of acquisition, with provisional goodwill of RM5.36 million pending final Purchase Price Allocation (PPA).

This acquisition marks a key step in Luxchem’s growth strategy, broadening its product range and potentially enhancing future earnings. The integration of Kazox is expected to contribute positively to the Group’s manufacturing segment in subsequent quarters.

Cash Flow and Balance Sheet Position

• Cash and Cash Equivalents: RM116.1 million as at 31 March 2026 (down from RM172.0 million at end-2025, largely due to investment activities).
• Total Assets: RM787.8 million; Total Equity: RM677.4 million.
• Net Cash Used in Investing Activities: RM51.45 million (notably for the acquisition of a subsidiary and capital expenditure on property, plant, and equipment).
• Capital Commitments: RM56.9 million approved for property, plant, and equipment and intangible assets, signaling ongoing expansion.
• Total Borrowings: RM55.8 million, reduced from the previous year, reflecting prudent financial management.

Dividend Payment

• A single-tier second interim dividend of 1.0 sen per share (total RM10.69 million) was paid on 12 March 2026 for the financial year ended 31 December 2025.

Segmental Performance and Geographic Breakdown

• Trading Segment: Revenue fell 22% to RM94.53 million; profit before tax up 5%.
• Manufacturing Segment: Revenue up 19% to RM82.64 million; profit before tax up 30%.
• Export Markets: Export revenue decreased 10% to RM70.49 million. Notable changes include a sharp increase in China (+97%) and India (>100%), but declines in Vietnam (-30%), Thailand (-29%), Australia (-55%), and the United States (-42%).

Other Noteworthy Points for Shareholders

• Strong Profitability Amid Revenue Decline: The Group’s ability to grow profits despite lower revenue is noteworthy and may signal improved operational leverage and/or pricing power.
• Strategic Expansion: The Kazox acquisition and ongoing capital expenditure commitments highlight a focus on long-term growth.
• Financial Flexibility: The Group maintains a strong balance sheet with significant cash reserves and reduced borrowings, positioning it well to weather market uncertainties or seize new opportunities.
• Dividend Commitment: Consistent dividend payouts reinforce shareholder confidence.
• Exposure to External Risks: Management flagged ongoing risks from USD/MYR volatility, raw material price fluctuations, and global supply chain disruptions, as well as geopolitical and trade uncertainties.
• No Material Litigation or Corporate Proposals: There are no ongoing legal matters or uncompleted corporate proposals that might affect share value.

Forward-Looking Statements

Luxchem’s management remains cautious but optimistic, focusing on enhancing productivity, cost efficiency, and maintaining a prudent financial position. The Group’s increasing focus on manufacturing, as well as strategic investments and acquisitions, are expected to drive long-term business resilience and growth.

Potential Price-Sensitive Information

• The significant increase in profitability despite a revenue drop, and the successful acquisition of Kazox Materials Sdn Bhd, are both potentially price-moving developments for Luxchem shares.
• Large capital commitments and continued dividend payments may also influence investor sentiment.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any securities. Investors are advised to conduct their own research or consult a licensed financial advisor before making investment decisions. The author and publisher are not responsible for any losses incurred as a result of reliance on the information contained herein.

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