That Silver Birdie..

Silver Bird announced its earnings last night. It was hardly a pretty sight.

All they had to show for their quarterly earnings was a net profit of 675 thousand from a sale revenue of 178.826 million.

Hardly a sign of an average business.

And it was just back in 2004 when Silver Bird proudly announced it was installing state-of-the-art equipment in its Shah Alam plant. A plant which cost a total investment of rm100 mil. And was touted as the single largest stand-alone bakery in Asean. Big plans, big dreams and as the saying goes no risk, no gain.

Well it's now 2 years since that grand plan unfolded.

And if one looks at the sales figure, yes, the sales revenue has indeed increased a lot. Sales revenue now totals an impressive 447 million for the first 9 months of this current fiscal year versus 349 million a year ago.

But ...

Where's the Moola for the shareholders?

Current nine months net profits are a mere 3.188 million versus 15.7 million. Company is burning cash up fast and the loans remains some staggering 150 million.

And this is what the company has got to say in its earning notes.

• The Group registered a revenue growth of 66% for the quarter under review, achieving RM178.7 million sales compared with the corresponding period of preceding year. Sales of consumer food registered a 26% growth to achieve RM44.8 million for this quarter compared with RM35.6 million for the corresponding period of preceding year due to the strong sales performance of the daily fresh products and multicom business. Multicom managed to achieve RM134.0 million in revenue to register 86% growth compared with RM71.9 million for the corresponding period of preceding year arising from improved sales through channel arrangement.
  
  The positive contribution noted was however dragged down by share of start up loss
  of the jointly controlled company amounting to loss of RM3.4 million for the quarter
  under review.

So they have a start up loss in a jv which cost them a loss of rm3.4 million.

Here's an interesting issue.

Remember the point of their state-of-art factory? An investment which cost 100 million? When one invests so much, surely there has got to be some justifiable returns. For example, if you install such machinery, the bottom-line has got to increase right?

Let's compare the reported quarter versus the quarter a year ago.

This quarter, sale revenue was 178.726 mil. Operating profit was 6.246 million. Operating profit margin equates to some 3.5% only.

Same quarter a year ago, sale revenue was much less at 107.424 million. Operating profit was 7.565 was at 7%.

How?

Doesn't this look like some issues regarding in its operating profits? And so what about its state-of-the-art plant in Shah Alam?

How?