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First Half of Fiscal Year 2024 Unaudited Financial Results

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Davis Commodities (DTCK) reported financial results for H1 2024, showing a revenue decline to $66.9 million from $97.8 million year-over-year. Net income decreased 35% to $1.3 million, with EPS falling to $0.05 from $0.08. The revenue decline was primarily due to decreased palm oil demand and sugar sales challenges. While rice sales increased 37.9% to $14.0 million, oil and fat products revenue dropped 78.9% to $8.0 million. The company maintained a stable gross margin of 4.4% despite market challenges. Geographic revenue shifts included an 18.5% decline in African markets and complete withdrawal from Indonesian markets during this period.

Davis Commodities (DTCK) ha riportato i risultati finanziari per il primo semestre del 2024, evidenziando un calo dei ricavi a $66,9 milioni rispetto a $97,8 milioni anno su anno. L'utile netto è diminuito del 35% a $1,3 milioni, con un utile per azione (EPS) che è sceso a $0,05 da $0,08. Il calo dei ricavi è stato principalmente dovuto alla diminuzione della domanda di olio di palma e alle difficoltà nelle vendite di zucchero. Sebbene le vendite di riso siano aumentate del 37,9% a $14,0 milioni, i ricavi dei prodotti a base di olio e grasso sono scesi del 78,9% a $8,0 milioni. L'azienda ha mantenuto un margine lordo stabile del 4,4% nonostante le difficoltà di mercato. Le variazioni geografiche dei ricavi hanno incluso un calo del 18,5% nei mercati africani e un ritiro completo dai mercati indonesiani durante questo periodo.

Davis Commodities (DTCK) informó resultados financieros para la primera mitad de 2024, mostrando una caída en ingresos a $66.9 millones desde $97.8 millones en comparación con el año anterior. Los ingresos netos disminuyeron un 35% a $1.3 millones, con un EPS que cayó a $0.05 desde $0.08. La disminución de ingresos se debió principalmente a una menor demanda de aceite de palma y desafíos en las ventas de azúcar. Mientras que las ventas de arroz aumentaron un 37.9% a $14.0 millones, los ingresos de productos de aceite y grasa cayeron un 78.9% a $8.0 millones. La compañía mantuvo un margen bruto estable del 4.4% a pesar de los desafíos del mercado. Los cambios geográficos en los ingresos incluyeron una caída del 18.5% en los mercados africanos y un retiro total de los mercados indonesios durante este período.

Davis Commodities (DTCK)는 2024년 상반기 재무 결과를 보고하며 수익이 작년 대비 $66.9 백만으로 $97.8 백만에서 감소했다고 발표했습니다. 순이익은 35% 감소한 $1.3 백만에 도달했으며, 주당 순이익(EPS)은 $0.05로 하락했습니다. 수익 감소는 주로 팜유 수요 감소와 설탕 판매의 어려움 때문이었습니다. 쌀 판매는 37.9% 증가하여 $14.0 백만에 이르렀지만, 오일 및 지방 제품의 수익은 78.9% 감소하여 $8.0 백만에 그쳤습니다. 회사는 시장의 어려움에도 불구하고 4.4%의 안정적인 총 매출 총이익률을 유지했습니다. 지리적 수익 변화에는 아프리카 시장에서 18.5% 감소가 포함되며, 이 기간 동안 인도네시아 시장에서 완전 철수를 하였습니다.

Davis Commodities (DTCK) a publié ses résultats financiers pour le premier semestre 2024, révélant une baisse de ses revenus à $66,9 millions contre $97,8 millions l'année précédente. Le bénéfice net a diminué de 35% pour atteindre $1,3 million, avec un BPA qui est tombé à $0,05 contre $0,08. La baisse des revenus était principalement due à une diminution de la demande d'huile de palme et à des difficultés dans les ventes de sucre. Bien que les ventes de riz aient augmenté de 37,9% à $14,0 millions, les revenus des produits à base d'huile et de graisse ont chuté de 78,9% à $8,0 millions. L'entreprise a maintenu une marge brute stable de 4,4% malgré les difficultés du marché. Les changements géographiques des revenus incluaient une baisse de 18,5% sur les marchés africains et un retrait complet des marchés indonésiens durant cette période.

Davis Commodities (DTCK) berichtete über die Finanzergebnisse für das erste Halbjahr 2024 und zeigte einen Rückgang der Einnahmen auf $66,9 Millionen von $97,8 Millionen im Jahresvergleich. Der Nettogewinn fiel um 35% auf $1,3 Millionen, während der Gewinn pro Aktie (EPS) auf $0,05 von $0,08 sank. Der Rückgang der Einnahmen war hauptsächlich auf die verringerte Nachfrage nach Palmöl und Herausforderungen im Zuckerverkauf zurückzuführen. Während die Reiserlöse um 37,9% auf $14,0 Millionen stiegen, fielen die Einnahmen aus Öl- und Fettprodukten um 78,9% auf $8,0 Millionen. Das Unternehmen hielt trotz der Herausforderungen auf dem Markt eine stabile Bruttomarge von 4,4% aufrecht. Zu den geografischen Änderungen der Einnahmen gehörte ein Rückgang um 18,5% auf den afrikanischen Märkten und ein vollständiger Rückzug aus den indonesischen Märkten während dieses Zeitraums.

Positive
  • Rice segment revenue increased 37.9% to $14.0 million
  • Gross margin slightly improved to 4.4% from 4.3%
  • Operating expenses decreased 10% to $1.8 million
  • Cash and cash equivalents increased to $1.4 million from $1.3 million
Negative
  • Total revenue declined 31.6% to $66.9 million
  • Net income decreased 35% to $1.3 million
  • Oil and fat products revenue dropped 78.9% to $8.0 million
  • Complete loss of Indonesian market revenue (previously $14.1 million)
  • Interest expense increased 350% to $0.09 million

Insights

Davis Commodities shows concerning financial performance with $66.9M revenue, down 31.6% YoY and net income declining 35% to $1.3M. Key challenges include:

  • Significant revenue drop in oil and fat products (78.9% decline)
  • Loss of Indonesian market share (previously $14M revenue)
  • Declining African market revenue (18.5% drop)

While maintaining gross margin at 4.4%, the company faces headwinds from commodity price fluctuations and regional market challenges. The cash position remains tight at $1.4M, with minimal operating cash flow of $0.2M. The EPS decline from $0.08 to $0.05 reflects operational pressures.

The commodity trading landscape presents significant challenges for Davis. Market dynamics show:

  • Sugar segment struggles with pricing issues in Indonesia and regulatory changes in Vietnam
  • Rice segment shows promise with 37.9% growth driven by African demand
  • Palm oil price volatility causing customers to seek alternatives
  • Chinese market shifting to domestic suppliers due to global price increases

Geographic concentration risk is evident with Africa representing 60% of revenue. The company's strategy to diversify markets and leverage existing partnerships appears important but execution remains uncertain given current market conditions.

SINGAPORE, Nov. 13, 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, announced its financial results for the six months ended June 30, 2024.

Ms. Li Peng Leck, Executive Chairperson and Executive Director of Davis Commodities, commented, “Our performance is shaped by fluctuations in commodity prices and shipping costs. We view certain unfavorable circumstances as transient. Through our well-established logistics supply chain, our goal is to alleviate the effects of these fluctuations. Moreover, we are committed to broadening our market presence, not only by reinforcing our market shares in the existing markets but also by considering venturing into new territories in an effort to expand our market share and reduce regional risks. Additionally, we intend to leverage the longstanding relationships we have with our business partners to capitalize on opportunities in emerging markets.”

First Half of Fiscal Year 2024 Financial Highlights

  • Revenue was $66.9 million for the six months ended June 30, 2024, compared to $97.8 million for the same period of the last fiscal year.
  • Gross profit was $2.9 million for the six months ended June 30, 2024, compared to $4.2 million for the same period of the last fiscal year.
  • Income from operations was $1.1 million for the six months ended June 30, 2024, which decreased by 50.0% from $2.2 million for the same period of the last fiscal year.
  • Net income was $1.3 million for the six months ended June 30, 2024, which decreased by 35.0% from $2.0 million for the same period of the last fiscal year.
  • Basic and diluted earnings per share were $0.05 for the six months ended June 30, 2024, compared to $0.08 for the same period of the last fiscal year.

Revenue

Total revenue was $66.9 million for the six months ended June 30, 2024, which decreased by 31.6% from $97.8 million for the same period of the last fiscal year. This decrease was mainly attributable to a decrease in demand for palm oil from our customers, compared to the same corresponding period.

 
 For the Six Months Ended June 30,
 2023   2024
($ thousands) Revenue  Cost of Revenue  Gross Margin  Revenue  Cost of Revenue
  Gross Margin
Sale of sugar 49,413   49,009   0.8%   44,891   43,759   2.5%
Sale of rice 10,129   7,925   21.8%   13,964   12,966   7.1%
Sale of oil and fat products 38,019   36,393   4.3%   8,021   7,234   9.8%
Sale of others 203   198   2.5%         
Total 97,764   93,525   4.3%   66,876   63,959   4.4%
 
  • Revenue from sales of sugar was $44.9 million for the six months ended June 30, 2024, which decreased by 9.1% from $49.4 million for the same period of the last fiscal year. This decline can be attributed to various challenges, including issues related to pricing. Specifically, the Company did not secure some tenders in the Indonesian market, due to pricing concerns. Additionally, the changes of import tariffs and regulation in Vietnam made it more costly for the sugar importers to import.

  • Revenue from sales of rice was $14.0 million for the six months ended June 30, 2024, which increased by 37.9% from $10.1 million for the same period of the last fiscal year. The rice prices were favorable during this period due to increased purchases by African countries.

  • Revenue from sales of oil and fat products was $8.0 million for the six months ended June 30, 2024, which decreased by 78.9% from $38.0 million for the same period of the last fiscal year. The significant revenue drop was due to a sharp upward trend in palm oil prices, peaking in 2022, followed by a price drop in 2023 that spurred demand. The favorable pricing and increased demand drove strong revenue growth in our oil and fat products, particularly within the African market segment in 2023. A partial price recovery in 2024 posed a challenge to sales volumes, as some customers sought alternatives in response to the upward price trend.

  • Revenue from sales of others was $0 for the six months ended June 30, 2024, compared to $0.2 million in the same period of the last fiscal year. The sale of others represented random sales of tomato paste based on customer requests and orders.

A breakdown of revenue in terms of geographic regions for the six-month periods ended June 30, 2023 and 2024 is summarized below:

                        
  For the six months ended June 30,
        
($ thousands)
 2023  %  2024  %  Variance  Change (%)
Africa $49,211   50.3  $40,112   60.0   (9,099)   (18.5)
China  11,842   12.1   5,762   8.6   (6,080)   (51.3)
Indonesia  14,056   14.4         (14,056)   (100.0)
Vietnam  2,371   2.4   2,734   4.1   363   15.3
Other countries  20,284   20.8   18,268   27.3   (2,016)   (9.9)
Total revenue $97,764   100.0  $66,876   100.0   (30,888)   (31.6)
                        
  • Revenue from the Africa market declined 18.5% for the six months ended June 30, 2024. The sales of rice and oil and fat products that were significantly decreased contributed to it.
  • Revenue from the China market experienced a decrease of 51.3%. The global price increased, hence Chinese importers turned to purchases within their domestic market to meet their supply requirements.
  • The Company was not awarded sugar tenders in the Indonesian market for the six months ended June 30, 2024, hence there was not any revenue from Indonesia.
  • Revenue from the Vietnamese market demonstrated growth, representing a 15.3% growth, which is attributable to an increase of demand for premixed sugar from Vietnam to China. The sugar sales generally increased due to the higher sales to Vietnam’s premixed importers.
  • The overall global prices of sugar and other commodities can significantly impact revenue for exporting countries and consequently lead to a dip in sales.

Cost of Revenue

Cost of revenue was $64.0 million for the six months ended June 30, 2024, which decreased by 31.6% from $93.5 million for the same period of the last fiscal year. The decrease was primarily due to the decreased revenue as described above, which was due to a lower demand for the Company’s sugar and oil products from customers. Accordingly, the cost of revenue increased correspondingly, due to the increased sales of rice.

Gross Profit and Gross Margin

Gross profit was $2.9 million for the six months ended June 30, 2024, which decreased by 31.0% from $4.2 million for the same period of the last fiscal year. The drop in rice profit margin is mainly due to intense competition from origin producers and sharp increases in supply chain costs, resulting in a significantly thinner profit margin, making previous profitability levels hard to achieve in the current reporting period.

Overall gross margin was 4.4% for the six months ended June 30, 2024, compared to 4.3% for the same period of the last fiscal year.

Operating Expenses

Operating expenses were $1.8 million for the six months ended June 30, 2024, which decreased by 10.0% from $2.0 million for the same period of the last fiscal year.

  • Selling and marketing expenses were $0.4 million for the six months ended June 30, 2024, which decreased by 42.9% from $0.7 million for the same period of the last fiscal year. The decrease was primarily due to a decrease in sales commissions payable as a result of the decrease in revenue.
  • General and administrative expenses were $1.3 million for the six months ended June 30, 2024, which remain unchanged from $1.3 million for the same period of the last fiscal year. There was a slight increase in expenses associated with the Company’s listing in 2023, primarily driven by higher audit fees, legal fees, listing fees, director fees, and professional fees.

Other Income and Interest Expense

Other income was $0.6 million for the six months ended June 30, 2024, which increased by 200.0% from $0.2 million for the same period of the last fiscal year. Contributing to such increase was the reversal of impairment loss from last financial year, interest income earned and the government grant received.

Interest expense was $0.09 million for the six months ended June 30, 2024, which increased by 350.0% from $0.02 million for the same period of last fiscal year. The increase was due to interests incurred on additional borrowings such as a loan from a related party which was drawn down on July 6, 2023, as well as additional finance lease facility which was drawn down on June 15, 2023.

Profit before Tax and Income Tax Expense

Profit before tax was $1.6 million for the six months ended June 30, 2024, which decreased by 30.4% from $2.3 million for the same period of the last fiscal year. Correspondingly, income tax was $0.3 million for the six months ended June 30, 2024, which decreased by $0.1 million from $0.4 million for the same period of last fiscal year.

Net Income

Net income was $1.3 million for the six months ended June 30, 2024, which decreased by 35.0% from $2.0 million for the same period of last fiscal year.

Basic and diluted earnings per share were $0.05 for the six months ended June 30, 2024, compared to $0.08 for same period of the last fiscal year.

Financial Condition

As of June 30, 2024, the Company had cash and cash equivalents of $1.4 million, compared to $1.3 million as of December 31, 2023.

Net cash provided by operating activities was $0.2 million for the six months ended June 30, 2024, as adjusted primarily by (i) the non-cash operating items of $0.42 million, such as depreciation of property, plant and equipment, fair value adjustment, reversal of impairment loss and interest, and (ii) a decrease in operating assets of $0.7 million. Net cash provided by operating activities was $0.05 million for the six months ended June 30, 2023, as adjusted primarily by (i) the non-cash operating items of $0.005 million, such as depreciation of property, plant and equipment, interest expense, adjustment of fair value and interest, and (ii) the decrease in operating assets of $1.9 million.

Net cash used in investing activities was $0.005 million for the six months ended June 30, 2024, attributable to the purchase of property, plant and equipment of $0.005 million. Net cash used in investing activities was $0.3 million for the six months ended June 30, 2023, attributable to the purchase of property, plant and equipment of $0.3 million and interest received from a convertible loan to a related party.

Net cash used in financing activities was $0.2 million for the six months ended June 30, 2024, which was attributable to the repayment of bank loans of $0.1 million, payment of finance lease of $0.02 million and payment of lease liabilities of $0.02 million. Net cash provided by financing activities was $0.2 million for the six months ended June 30, 2023, which was mainly attributable to a loan from a related party and proceeds from a finance lease; offset by repayments of bank borrowings and payment of finance lease and lease liabilities.

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 six months ended June 30, 2024. 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

Celestia Investor Relations
Dave Leung
Phone: +852 9494-3413
Email: investors@celestiair.com

        
DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
(Amount in thousands, except for share and per share data, or otherwise noted)
        
 As of Dec 31,
  As of Jun 30, 
 2023
  2024 
 US$’000  US$’000 
Assets       
Current assets:       
Cash and cash equivalents 1,330   1,363 
Accounts receivable, net 15,267   14,095 
Prepaid expenses and other current assets, net 6,131   6,346 
Inventory 537   152 
Total current assets 23,265   21,956 
Property, plant and equipment 633   608 
Right-of-use asset 73   55 
Loan to a related party 5,907   6,089 
        
        
Total non-current assets 6,613   6,752 
        
        
TOTAL ASSETS 29,878   28,708 
        
Liabilities       
Current liabilities:       
Bank loans – current 207   213 
Lease payable – current 36   37 
Finance lease – current 29   29 
Accounts payable 14,323   13,200 
Accruals and other current liabilities 3,850   3,033 
Income taxes payable 713   285 
Total current liabilities 19,158   16,797 
Bank loans – non-current 323   213 
Lease payable – non-current 38   19 
Finance lease – non-current 101   87 
Total non-current liabilities 462   319 
TOTAL LIABILITIES 19,620   17,116 
        
Commitments and contingencies     
        
Shareholders’ equity       
Ordinary shares US$0.000000430108 par value per share; 232,500,000,000 authorized as of       
December 31, 2023 and June 30, 2024; 24,500,625 shares issued and outstanding** *   * 
Additional paid-in capital 3,151   3,151 
Merger reserve 1,113   1,113 
Retained earnings 5,981   7,315 
Accumulated other comprehensive income 13   13 
Total shareholders’ equity 10,258   11,592 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 29,878   28,708 
        

* Denotes amount less than US$1,000.
** Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

   
DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Amount in thousands, except for share and per share data, or otherwise noted)
         
  For the six-month period ended
 
  June 30, 
  2023  2024 
  US$’000  US$’000 
Revenues  97,764   66,876 
Cost of revenues  (93,525)  (63,959)
Gross profit  4,239   2,917 
Operating expenses:        
Selling and marketing expenses  (720)  (439)
General and administrative expenses  (1,324)  (1,346)
Total operating expenses  (2,044)  (1,785)
Income from operations  2,195   1,132 
         
Other income/(expense):        
Other income  155   583 
Interest expense  (18)  (90)
Total other income  137   493 
Income before tax expense  2,332   1,625 
Income tax expense  (381)  (291)
Net income  1,951   1,334 
Other comprehensive income        
Foreign currency translation loss, net of taxes  7   * 
Total comprehensive income  1,958   1,334 
Net income per share attributable to ordinary shareholders
        
Basic and diluted $0.08  $0.05 
Weighted average number of ordinary shares used in computing net income per share
        
Basic and diluted**  23,250,000   24,500,625 
         

* Denotes amount less than US$1,000.
** Retrospectively restated for the effect of a 2,325-for-1 share subdivision.

 
DAVIS COMMODITIES LIMITED AND ITS SUBSIDIARIES
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amount in thousands, except for share and per share data, or otherwise noted)

        
 For the six-month period ended
 
 June 30,
 
 2023  2024 
 US$’000  US$’000 
Net income 1,951   1,334 
Adjustments:       
Depreciation and amortization 30   48 
Unrealized loss/(gain) on derivative contract at fair value 3   (59)
Reversal of impairment loss    (314)
Interest expense 15   86 
Interest expense on finance lease *   2 
Interest expense on lease liability    2 
Interest income (43)  (181)
  1,956   918 
Changes in operating assets:       
Decrease in inventories 1,698   385 
(Increase)/decrease of accounts and other receivables (15,987)  1,330 
(Increase) in deferred offering costs (209)   
Increase/(decrease) in accounts and other payables, and accruals 12,816   (1,979)
(Decrease) in income tax payable (224)  (428)
Increase in operating lease liabilities 1    
Cash provided by operating activities 51   226 
        
Interest received 43    
Purchase of property, plant and equipment (299)  (5)
Cash (used in)/provided by investing activities (256)  (5)
        
Amount due to related parties 114    
Proceeds from finance lease 144    
Repayment of bank borrowings (67)  (104)
Interest paid (15)  (48)
Principal payment of finance lease (2)  (14)
Principal payment of lease liabilities    (18)
Payment of interest on finance lease *   (2)
Payment of interest on lease liabilities    (2)
Cash provided by/(used in) financing activities 174   (188)
        
Net change in cash and cash equivalents (31)  33 
Cash and cash equivalents as of beginning of the period 2,540   1,330 
Cash and cash equivalents as of the end of the period 2,509   1,363 
        
Supplementary Cash Flows Information       
Cash paid for taxes (601)  (719)
Operating lease asset obtained in exchange for operating lease obligations  150    
        

* Denotes amount less than US$1,000


FAQ

What was Davis Commodities (DTCK) revenue for H1 2024?

Davis Commodities reported revenue of $66.9 million for H1 2024, representing a 31.6% decrease from $97.8 million in the same period last year.

How much did DTCK's net income decrease in H1 2024?

DTCK's net income decreased by 35% to $1.3 million in H1 2024, compared to $2.0 million in the same period last year.

What was DTCK's earnings per share for H1 2024?

DTCK reported basic and diluted earnings per share of $0.05 for H1 2024, down from $0.08 in the same period last year.

How did DTCK's rice segment perform in H1 2024?

DTCK's rice segment revenue increased by 37.9% to $14.0 million in H1 2024, up from $10.1 million in the same period last year.

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Farm Products
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