Davis Commodities Limited: First Half of Fiscal Year 2025 Unaudited Financial Results

Core Viewpoint - Davis Commodities Limited reported significant revenue growth driven by increased demand for liquid sugar and rice, despite facing challenges with rising costs and regulatory changes impacting certain markets [2][4][10]. Financial Performance - Total revenue for the six months ended June 30, 2025, was $95.0 million, a 42.11% increase from $66.9 million in the same period last year [4][6]. - Gross profit decreased to $2.6 million, down 9.8% from $2.9 million year-over-year, primarily due to rising purchase and transportation costs [6][12]. - Net income fell to $0.04 million, a 96.9% decrease from $1.3 million in the previous year [6][18]. - Basic and diluted earnings per share were $0.01, compared to $0.05 for the same period last year [6][20]. Revenue Breakdown - Revenue from sugar sales was $60.8 million, up 35.4% from $44.9 million, attributed to stronger sales in China and higher demand from Africa [7]. - Revenue from rice sales increased by 41.3% to $19.7 million, driven by market development in Africa and lower prices encouraging higher sales volume [7]. - Revenue from oil and fat products rose by 81.0% to $14.5 million, mainly due to lower oil prices stimulating demand [9]. Geographic Revenue Distribution - Revenue from Africa was $66.2 million, a 64.9% increase from $40.1 million, reflecting successful market development efforts [10]. - Revenue from China surged by 164.4% to $15.2 million, driven by increased market share in liquid sugar [10]. - Revenue from Vietnam decreased by 54.2% to $1.3 million, and revenue from Thailand dropped by 81.7% to $1.6 million due to regulatory changes affecting sugar imports [10]. Cost and Margin Analysis - Cost of revenue increased by 44.5% to $92.4 million, primarily due to higher demand and associated costs [9]. - Overall gross margin decreased to 2.8% from 4.4% year-over-year, as rising costs were not fully passed on to customers [13]. Operating Expenses and Other Income - Operating expenses were $2.8 million, down 57.9% from the previous year [14]. - Other income decreased by 27.8% to $0.4 million, mainly due to the absence of ECL reversals and reduced government grants [15]. Cash Flow and Financial Condition - As of June 30, 2025, cash and cash equivalents were $1.7 million, up from $0.7 million at the end of 2024 [21]. - Net cash used by operating activities was $2.3 million, reflecting changes in working capital [22]. - Net cash provided by financing activities was $3.3 million, primarily from new bank borrowings [24].