SINGAPORE (Mar 14): Biscuit manufacturer Khong Guan reported 1H18 earnings of $0.8 million for the half year ended Jan 2018, up eightfold from $95,000 a year ago on lower costs and other expenses.

Revenue grew 0.25% to $28.8 million from $28.7 million in 1H17, with the modest increase attributed to an improvement in the turnover of the group’s Swee Hin Chan (SHC) operations in Penang.

This was however offset in part by a decline in turnover from Tong Guan Food Products (TGF), Khong Guan’s trading subsidiary in Sabah. The group highlights that while TGF continued to do well in the sales of its biscuits and non-edible goods, the restriction of sales quota on edible oil and termination of a distributorship by a food and beverage (F&B) company had slightly affected the sales of edible goods.

Changes in short-term investments returned to profitability of $0.6 million compared to losses of $0.8 million a year ago, mainly due to a significant reduction of cost of investment sold, to $0.7 million from $2 million in the previous year.

Other expenses, too, fell 36.2% to $1 million from $1.5 million in 1H17 in the absence of an allowance made for doubtful trade receivables and foreign exchange (forex) losses incurred in the previous year.

In its outlook, Khong Guan says its 30%-owned associate’s oat milling subsidiary in the process of constructing a new plant in Penang at a projected cost of RM120 million ($40.3 million), which is to be funded internally and from bank borrowings.

Notwithstanding fluctuations in forex rates and fair value of short-term investments, the group’s directors say they expect an improvement in operational results in 2H18.

Shares in Khong Guan closed flat at $1.90 on Tuesday.