Davis Commodities Limited Announces Fiscal Year 2023 Financial Results
Davis Commodities (Nasdaq: DTCK) announced its fiscal year 2023 financial results, reporting total revenues of $190.7 million, a 7.7% decline from $206.7 million in 2022. The revenue drop was due to decreased demand for sugar and rice in Southeast Asia, particularly Indonesia and Vietnam. However, revenue from oil and fat products surged by 171%. Regionally, notable revenue growth occurred in Africa (41.8%), the Philippines (499%), Thailand (562.6%), and Singapore (114.5%), while Indonesia and Vietnam saw significant declines (71.7% and 68.2%, respectively). Gross profit decreased by 45.4% to $7 million, with a gross margin of 3.7%, down from 6.2%. Operating expenses dropped by 22.5% to $5.9 million, but general and administrative expenses rose by 47.8%. Net income fell by 76.5% to $1.1 million, with basic and diluted EPS at $0.04, down from $0.20. The company had $1.3 million in cash and cash equivalents at year-end, compared to $2.5 million in 2022.
- Revenue from oil and fat products increased by 171% to $47.6 million.
- Significant revenue growth in Africa (41.8%), the Philippines (499%), Thailand (562.6%), and Singapore (114.5%).
- Operating expenses decreased by 22.5% to $5.9 million.
- Net cash generated by operating activities was $1.8 million, compared to a net cash outflow in 2022.
- Total revenues declined by 7.7% to $190.7 million.
- Revenue from sugar dropped by 24.7%, and from rice by 22.7%.
- Gross profit fell by 45.4% to $7 million, with a gross margin decrease from 6.2% to 3.7%.
- Net income decreased by 76.5% to $1.1 million.
- General and administrative expenses rose by 47.8%.
- Interest expense increased by 233.3%, due to higher bank borrowings.
- Net cash used in investing activities was $208,000, a significant increase from 2022.
Insights
Revenue Analysis: Davis Commodities reported a total revenue of
Gross Margin and Profitability: The company's gross margin decreased to
Geographic Revenue Shifts: Revenue dynamics are shifting, with Africa now contributing
Investor Perspective: For investors, the company's adaptability in exploring new markets and segments like oil and fat products is a positive sign. However, the overall decline in revenue and significant drop in net income by
Demand Fluctuations: The revenue decline from sugar and rice sales in Southeast Asia—specifically Indonesia and Vietnam—due to regulatory challenges and export bans from India, highlights the volatility in commodity markets. Southeast Asia's historically strong demand faced disruption, calling for a re-evaluation of market dependency and strategic sourcing.
Emerging Market Potential: The robust revenue growth in Africa, the Philippines and Thailand showcases successful market diversification. Africa's revenue increase by
Strategic Implications: Davis Commodities' ability to leverage Free Trade Agreements (FTAs) and government regulatory changes, such as the Philippines' import permits, indicates a proactive approach to external factors. Expanding distribution channels and solidifying market presence in emerging markets are pivotal steps towards sustained growth. However, the reliance on regulatory changes and trade agreements introduces an element of unpredictability.
Retail Investor Takeaway: Retail investors should recognize the dual narrative of growth opportunities against a backdrop of declining traditional markets. The company's agility in responding to external market forces and its strategic moves into growth markets offer a mixed but potentially favorable outlook. Understanding how geopolitical and regulatory shifts impact commodity trading will be important for gauging future performance.
Cost Management and Liquidity: The company managed to decrease operating expenses by
Debt and Financing: The increase in interest expense by
Investor Guidance: Investors should closely monitor the company’s liquidity position and debt levels. The higher interest expenses amid declining revenues signal potential cash flow issues. While strategic market expansion is promising, the financial health reflected in liquidity and debt management will be important for assessing long-term viability.
SINGAPORE, May 15, 2024 (GLOBE NEWSWIRE) -- Davis Commodities Limited (Nasdaq: DTCK) (the "Company" or "Davis Commodities"), an agricultural commodity trading company that specializes in trading sugar, rice, and oil and fat products, today announced its financial results for the fiscal year ended December 31, 2023.
Ms. Li Peng Leck, Executive Chairwoman and Executive Director of Davis Commodities, commented, “I’m glad to present our financial results for fiscal year 2023. During this period, our business has maintained profitability across all products, being sugar, rice, and oil and fat products. Particularly noteworthy is the exceptional growth in revenue from the sale of oil and fat products, which surged by
Fiscal Year 2023 Financial Results
Revenue
Total revenues of the Company were US
| For the Fiscal Years Ended December 31, | ||||||||||||||
| 2023 | 2022 | |||||||||||||
| (US$ thousands) | Revenue | | Cost of Revenue | | Gross Margin | | Revenue | | Cost of Revenue | | Gross Margin | |||
| Sale of sugar | 116,443 | 113,110 | 2.9 | % | 154,757 | 145,071 | 6.3 | % | ||||||
| Sale of rice | 26,440 | 25,325 | 4.2 | % | 34,200 | 32,099 | 6.1 | % | ||||||
| Sale of oil and fat products | 47,623 | 45,065 | 5.4 | % | 17,568 | 16,489 | 6.1 | % | ||||||
| Sale of others | 218 | 195 | 10.6 | % | 192 | 181 | 5.7 | % | ||||||
| Total | 190,724 | 183,695 | 3.7 | % | 206,717 | 193,840 | 6.2 | % | ||||||
- Revenue from sales of sugar was US
$116.4 million for fiscal year 2023, which decreased by24.7% from US$154.8 million for fiscal year 2022. This decline was attributable to a decrease in demand for sugar from our customers in Southeast Asia, notably, Indonesia and Vietnam. Additionally, the decrease was linked to the market disruption caused by India’s decision to ban sugar exports.
- Revenue from sales of rice was US
$26.4 million for fiscal year 2023, which decreased by22.7% from US$34.2 million for fiscal year 2022. The decline was a direct consequence of reduced demand for rice, primarily stemming from the export ban imposed by the Indian government. This ban limits the availability of Indian rice in the international market, disrupting the established trade pattern. The Company is actively seeking alternative options for rice sourcing, to mitigate the adverse effects of the export ban on the Company’s revenue stream.
- Revenue from sales of oil and fat products was US
$47.6 million for fiscal year 2023, which increased by171.0% from US$17.6 million for fiscal year 2022. The increase was attributable to the palm oil prices which have experienced a significant upward trend over the past three years, reaching an all-time high in 2022. In 2023, there was a price drop, leading to an increase in demand.
- Revenue from sales of others was US
$0.2 million for fiscal year 2023 The sales of other products were random sales during the year, specifically, sales of tomato puree and creamer.
A breakdown of revenue by geographic regions for the fiscal years ended December 31, 2023 and 2022 is summarized below:
| For the fiscal years ended December 31, | ||||||||||||||||||||||||
| (US$ thousands) | 2023 | % | 2022 | % | Amount | Change (%) | ||||||||||||||||||
| US$’000 | US$’000 | US$’000 | ||||||||||||||||||||||
| Africa | $ | 80,637 | 42.3 | 56,863 | 27.5 | 23,774 | 41.8 | |||||||||||||||||
| China | 17,731 | 9.3 | 16,629 | 8.0 | 1,102 | 6.6 | ||||||||||||||||||
| Indonesia | 22,502 | 11.8 | 79,645 | 38.5 | (57,143 | ) | (71.7 | ) | ||||||||||||||||
| Vietnam | 9,109 | 4.8 | 28,663 | 13.9 | (19,554 | ) | (68.2 | ) | ||||||||||||||||
| Philippines | 19,372 | 10.2 | 3,237 | 1.6 | 16,135 | 499.0 | ||||||||||||||||||
| Thailand | 13,120 | 6.9 | 1,980 | 1.0 | 11,140 | 562.6 | ||||||||||||||||||
| Singapore | 18,889 | 9.9 | 8,808 | 4.3 | 10,081 | 114.5 | ||||||||||||||||||
| Other countries | 9,364 | 4.8 | 10,892 | 5.2 | (1,528 | ) | (14.0 | ) | ||||||||||||||||
| Total revenue | $ | 190,724 | 100.0 | 206,717 | 100 | (15,993 | ) | (7.7 | ) | |||||||||||||||
- Revenue from the Africa market experienced growth of
41.8% . Africa’s contribution to total revenue increased to42.3% for fiscal year 2023, from27.5% for fiscal year 2022. The increase was driven by a rise in revenue generated from oil and fat products. The Company strategically engaged with specialized traders in oil and fat products, which contributed significantly to the growth in this market.
- Revenue from China market demonstrated moderate growth, representing a
6.6% growth. The increase was attributable to the Company’s successful penetration into liquid sugar sales within China.
- Revenue from the Indonesian market experienced a decline of
71.7% , which can be attributed to challenges in securing tenders for sugar imports, affecting the Company’s ability to generate revenue from this market.
- Revenue from the Vietnam market decreased by
68.2% , primarily because in Vietnam, the government took action to regulate the impact of the price of imported sugar to their domestic sugar industry by imposing duties and quota restrictions, which led to the decrease in demand.
- Revenue from the Philippines market increased significantly by
499.0% , primarily due to two key factors. Firstly, industrial users in the country expanded their capacity, leading to higher demand for our products. Secondly, the Philippine government issued sugar import permits in response to a poor local crop yield, which further boosted our revenue in the region.
- Revenue from the Thailand market showed notable growth, representing a
562.6% increase, which was attributed to the expansion of capacity in Thailand’s Export Processing Zone (EPZ) factories, specifically to cater to the Chinese market. This growth was facilitated by the Free Trade Agreement (FTA) between Thailand and China, enabling increased exports to China from the EPZ factories.
- Revenue from the Singapore market increased by
114.5% , which was mainly attributed to the expansion of capacity among local general trade and industrial users. This surge underscores the widespread acceptance of our sugar brand in the Singapore market, further contributing to our revenue growth.
- Revenue from other countries decreased by
14.0% . This decrease was a result of a mixed performance across various countries, where some experienced increases while others saw decreases. These fluctuations, although present, were not significant enough to offset the overall decline in revenue.
Cost of Revenue
Cost of revenue was US
Gross Profit and Gross Margin
Gross profit was US
Gross margin was
Operating Expenses
Operating expenses of the Company were US
- Selling and marketing expenses were US
$2.4 million for fiscal year 2023, which decreased by54.7% from US$5.3 million for fiscal year 2022. The decrease was primarily due to a decrease in sales-related expenses and commissions payable.
- General and administrative expenses were US
$3.4 million for fiscal year 2023, which increased by47.8% from US$2.3 million for fiscal year 2022. The increase was primarily due to an increase in employee benefits, office running cost, legal and professional fees, impairment losses, directors’ and officers’ liability insurance and overseas office expenses.
Other Income and Interest Expense
Other income was US
Interest expense was US
Profit before Tax and Income Tax Expense
Profit before tax was US
Net Income
Net income was US
Basic and diluted earnings per share were US
Financial Condition
As of December 31, 2023, the Company had cash and cash equivalents of US
Net cash generated by operating activities was US
Net cash used in investing activities was US
Net cash used in financing activities was US
About Davis Commodities Limited
Based in Singapore, Davis Commodities Limited is an agricultural commodity trading company that specializes in trading sugar, rice, and oil and fat products in various markets, including Asia, Africa and the Middle East. The Company sources, markets, and distributes commodities under two main brands: Maxwill and Taffy in Singapore. The Company also provides customers of its commodity offerings with complementary and ancillary services, such as warehouse handling and storage and logistics services. The Company utilizes an established global network of third-party commodity suppliers and logistics service providers to distribute sugar, rice, and oil and fat products to customers in over 20 countries, as of the fiscal year ended December 31, 2023. For more information, please visit the Company’s website: ir.daviscl.com.
Forward-Looking Statements
Certain statements in this announcement are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on the Company’s current expectations and projections about future events that the Company believes may affect its financial condition, results of operations, business strategy and financial needs. Investors can find many (but not all) of these statements by the use of words such as “approximates,” “believes,” “hopes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “will,” “would,” “should,” “could,” “may,” or other similar expressions. The Company undertakes no obligation to update or revise publicly any forward-looking statements to reflect subsequent occurring events or circumstances, or changes in its expectations, except as may be required by law. Although the Company believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that such expectations will turn out to be correct, and the Company cautions investors that actual results may differ materially from the anticipated results and encourages investors to review other factors that may affect its future results in the Company’s registration statement and other filings with the U.S.Securities and Exchange Commission.
For more information, please contact:
Davis Commodities Limited
Investor Relations Department
Email: investors@daviscl.com
Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com
| DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Amount in thousands, except for share and per share data, or otherwise noted) | ||||||||
| As of December 31, | ||||||||
| 2022 | 2023 | |||||||
| US$’000 | US$’000 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | 2,540 | 1,330 | ||||||
| Accounts receivable, net | 4,656 | 15,267 | ||||||
| Prepaid expenses and other current assets | 7,001 | 6,131 | ||||||
| Deferred offering costs | 1,129 | – | ||||||
| Inventory | 2,176 | 537 | ||||||
| Total current assets | 17,502 | 23,265 | ||||||
| Property, plant and equipment | 399 | 633 | ||||||
| Right-of-use asset | – | 73 | ||||||
| Loan to a related party | – | 5,907 | ||||||
| Total non-current assets | 399 | 6,613 | ||||||
| TOTAL ASSETS | 17,901 | 29,878 | ||||||
| Liabilities | ||||||||
| Current liabilities: | ||||||||
| Bank loans - current | 157 | 207 | ||||||
| Lease payable - current | – | 36 | ||||||
| Finance lease - current | – | 29 | ||||||
| Accounts payable | 5,096 | 14,323 | ||||||
| Accruals and other current liabilities | 4,749 | 3,850 | ||||||
| Income taxes payable | 1,357 | 713 | ||||||
| Total current liabilities | 11,359 | 19,158 | ||||||
| Bank loans – non-current | 528 | 323 | ||||||
| Lease payable – non-current | – | 38 | ||||||
| Finance lease – non-current | – | 101 | ||||||
| Deferred tax liabilities | 1 | – | ||||||
| Total non-current liabilities | 529 | 462 | ||||||
| TOTAL LIABILITIES | 11,888 | 19,620 | ||||||
| Commitments and contingencies | – | – | ||||||
| Shareholders’ equity | ||||||||
| Ordinary shares US | * | * | ||||||
| Additional paid-in capital | – | 3,151 | ||||||
| Merger reserve | 1,113 | 1,113 | ||||||
| Retained earnings | 4,895 | 5,981 | ||||||
| Accumulated other comprehensive income | 5 | 13 | ||||||
| Total shareholders’ equity | 6,013 | 10,258 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 17,901 | 29,878 | ||||||
| * | Denotes amount less than US$’000. |
| ** | Retrospectively restated for the effect of a 2,325-for-1 share subdivision. |
| DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Amount in thousands, except for share and per share data, or otherwise noted) | ||||||||||||
| For the years ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| US$’000 | US$’000 | US$’000 | ||||||||||
| Revenues | 194,239 | 206,717 | 190,724 | |||||||||
| Cost of revenues | (181,994 | ) | (193,840 | ) | (183,695 | ) | ||||||
| Gross profit | 12,245 | 12,877 | 7,029 | |||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing expenses | (5,396 | ) | (5,307 | ) | (2,439 | ) | ||||||
| General and administrative expenses | (1,871 | ) | (2,287 | ) | (3,443 | ) | ||||||
| Total operating expenses | (7,267 | ) | (7,594 | ) | (5,882 | ) | ||||||
| Income from operations | 4,978 | 5,283 | 1,147 | |||||||||
| Other income/(expense): | ||||||||||||
| Other income | 671 | 285 | 198 | |||||||||
| Interest expense | (48 | ) | (33 | ) | (110 | ) | ||||||
| Total other income | 623 | 252 | 88 | |||||||||
| Income before tax expense | 5,601 | 5,535 | 1,235 | |||||||||
| Income tax expense | (901 | ) | (920 | ) | (149 | ) | ||||||
| Net income | 4,700 | 4,615 | 1,086 | |||||||||
| Other comprehensive income | ||||||||||||
| Foreign currency translation loss, net of taxes | (3 | ) | (2 | ) | 8 | |||||||
| Total comprehensive income | 4,697 | 4,613 | 1,094 | |||||||||
| Net income per share attributable to ordinary shareholders | ||||||||||||
| Basic and diluted | $ | 0.20 | $ | 0.20 | $ | 0.04 | ||||||
| Weighted average number of ordinary shares used in computing net income per share | ||||||||||||
| Basic and diluted* | 23,250,000 | 23,250,000 | 24,500,625 | |||||||||
| * | Retrospectively restated for the effect of a 2,325-for-1 share subdivision. |
| DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Amount in thousands, except for share and per share data, or otherwise noted) | ||||||||||||
| For the years ended December 31, | ||||||||||||
| 2021 | 2022 | 2023 | ||||||||||
| US$’000 | US$’000 | US$’000 | ||||||||||
| Net income | 4,700 | 4,615 | 1,086 | |||||||||
| Adjustments: | ||||||||||||
| Depreciation and amortization | 54 | 58 | 62 | |||||||||
| Unrealized loss on derivative contract at fair value | (389 | ) | 218 | – | ||||||||
| Allowance for expected credit losses | – | – | 500 | |||||||||
| Impairment loss for damaged inventory | – | – | 16 | |||||||||
| Bad trade debts written off | – | – | 2 | |||||||||
| Interest expense | 46 | 33 | 103 | |||||||||
| Interest expense on finance lease | – | – | 2 | |||||||||
| Interest expense on lease liability | 2 | * | 5 | |||||||||
| Interest income | (53 | ) | (56 | ) | (88 | ) | ||||||
| 4,360 | 4,868 | 1,688 | ||||||||||
| Changes in operating assets: | ||||||||||||
| Decrease/(increase) in inventories | 241 | (2,082 | ) | 1,624 | ||||||||
| (Increase)/decrease in margin deposits | (599 | ) | 559 | 571 | ||||||||
| (Increase)/decrease of accounts and other receivables | (11,140 | ) | 4,146 | (10,808 | ) | |||||||
| (Increase)/decrease in deferred offering costs | – | (1,129 | ) | 1,129 | ||||||||
| Increase/(decrease) in accounts and other payables, and accruals | 10,433 | (8,727 | ) | 8,253 | ||||||||
| Decrease in amount due from directors | (990 | ) | * | – | ||||||||
| Decrease in operating lease liabilities | – | – | (3 | ) | ||||||||
| Increase/(decrease) in income tax payable | 910 | 419 | (645 | ) | ||||||||
| Cash provided by/(used in) operating activities | 3,215 | (1,946 | ) | 1,809 | ||||||||
| Interest received | 53 | 56 | 88 | |||||||||
| Purchase of property, plant and equipment | (11 | ) | (14 | ) | (296 | ) | ||||||
| Cash provided by/(used in) investing activities | 42 | 42 | (208 | ) | ||||||||
| Amount due to related parties | (157 | ) | * | – | ||||||||
| Loan to a related party | – | – | (5,907 | ) | ||||||||
| Issuance of share capital | – | * | * | |||||||||
| Dividend paid | – | (3,001 | ) | – | ||||||||
| Net proceeds from offering | – | – | 3,151 | |||||||||
| Proceeds from bank borrowings | 256 | 575 | – | |||||||||
| Proceeds from finance lease | – | – | 144 | |||||||||
| Repayment of bank borrowings | (2,039 | ) | (146 | ) | (155 | ) | ||||||
| Interest paid | (46 | ) | (33 | ) | (28 | ) | ||||||
| Principal payment of finance lease | – | – | (14 | ) | ||||||||
| Principal payment of lease liabilities | (38 | ) | (38 | ) | – | |||||||
| Payment of interest on finance lease | – | – | (2 | ) | ||||||||
| Payment of interest on lease liabilities | (2 | ) | * | * | ||||||||
| Cash (used in)/provided by financing activities | (2,026 | ) | (2,643 | ) | (2,811 | ) | ||||||
| Net change in cash and cash equivalents | 1,231 | (4,547 | ) | (1,210 | ) | |||||||
| Cash and cash equivalents as of beginning of the year | 5,856 | 7,087 | 2,540 | |||||||||
| Cash and cash equivalents as of the end of the year | 7,087 | 2,540 | 1,330 | |||||||||
| Supplementary Cash Flows Information | ||||||||||||
| Cash refunded/(paid) for taxes | 9 | (499 | ) | (791 | ) | |||||||
| Operating lease asset obtained in exchange for operating lease obligations | – | – | 150 | |||||||||
| Dividend that was offset against loan assumed by shareholder/director | (2,051 | ) | (671 | ) | – | |||||||
| * | Denotes amount less than US |
FAQ
What were Davis Commodities' total revenues for fiscal year 2023?
How did Davis Commodities' revenue from oil and fat products change in 2023?
What regions saw significant revenue growth for Davis Commodities in 2023?
What was Davis Commodities' net income for fiscal year 2023?
How did Davis Commodities' operating expenses change in 2023?
What was the impact on gross profit and gross margin for Davis Commodities in 2023?
How did Davis Commodities' revenue from sugar change in 2023?
What were the changes in Davis Commodities' cash and cash equivalents by the end of 2023?
