<a href="https://www.theedgesingapore.com/tags/avarga" target="_blank">Avarga</a>, which holds interests in multiple industries, has reported record earnings and revenue for its 1HFY2021 ended June 30.

From $14.9 million recorded in 1HFY2020, the company’s earnings surged by 381% y-o-y to $71.8 million. Revenue in the same period doubled from $720.3 million to $1.44 billion.

The company plans to pay another interim dividend of 0.42 cent per share, up from 0.36 cent paid this time last year. Under the company's existing policy of paying out dividends quarterly, it has already paid 0.42 cent for 1QFY2021.

Avarga’s executive chairman is Tong Kooi Ong, who is also chairman of The Edge Media Group, the parent company of the publisher of The Edge Singapore. Ian Tong, CEO of Avarga, is also an executive director of The Edge Media Group.

See also: <a href="https://www.theedgesingapore.com/capital/results/avarga-declares-interim-dividend-042-cent-share-1q21" target="_blank">Avarga declares interim dividend of 0.42 cent per share for 1Q21</a>

The big jump was driven by Taiga Building Products, a building materials supplier in Canada controlled by Avarga. Due to lockdowns imposed across North America last year, many people chose to renovate and rebuild their homes, driving up demand. On the other hand, supply lagged.

Gross margin for this business increased from 10.8% in 1HFY2020 to 18% in 1HFY2021, leading to a gross profit of $254.8 million, double that of 1HFY2020.

However, Avarga notes that since the middle of July, there has been a “sharp decline” in the selling prices it can fetch for its lumber and panels, as consumers divert spending on home improvements back to travel and leisure after lockdown measures ease.

“Taiga’s third-quarter earnings are expected to be negatively impacted by this recent development,” the company warns.

Besides building materials, Avarga operates a packaging material manufacturing business too. While production volume was affected by the movement restriction measures in Malaysia, higher selling prices helped offset the drop. For 1HFY2021, gross profit for this segment was $4.1 million, versus $4.3 million recorded in 1HFY2020.

Avarga assures investors it is keeping an eye on the “continued risks of developments relating to Covid-19, especially evolving policy restrictions which could affect its supply and customer chains.”

In addition, Avarga runs a power plant in Myanmar with a 30-year-long offtake contract. Gross profit for this business was nearly $3.2 million for 1HFY2021, versus $3.4 million the year earlier.

“Operations at our power plant have continued as normal and have not been affected by these developments,” notes Avarga, referring to the change in Myanmar’s government in February this year.

For more stories about where the money flows, <a href="https://www.theedgesingapore.com/section/capital" target="_blank">click here</a> for our Capital section

Avarga shares closed Aug 13 at 31 cents, up 1.67% for the day and up 8.93% year to date.

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