BP Plastics faces sharp earnings drop amid weak global demand

MALAYSIA – BP Plastics Holding Bhd, a Malaysian manufacturer of polyethylene flexible packaging, reported a steep 62% decline in net profit for the first half of 2025, dropping to US$1.28 million, according to the company’s financial statement. 

The downturn stems from sluggish demand in export markets, intensified trade tensions, and fierce price competition from regional players. 

Revenue also fell 13% year-on-year, driven by reduced global demand for stretch films, which account for over 70% of the company’s income.

Export markets, contributing more than 65% of revenue, bore the brunt of the challenges, while domestic sales held steady. 

“We’re navigating a tough landscape with global trade disruptions and aggressive pricing from competitors,” said a company spokesperson. 

BP Plastics attributed part of the strain to excess inventory among regional rivals, which led to price dumping and squeezed profit margins. 

The company opted not to declare a dividend for the quarter, prioritizing financial stability.

Analysts have adjusted their outlook, projecting 2025 revenue at US$80.4 million, an 18% drop from the previous year. 

Earnings per share estimates rose slightly to US$0.021 from US$0.012, but the consensus price target for the company’s stock fell 6.2% to US$0.21. 

The flexible packaging industry faces ongoing hurdles, including economic uncertainties and rising operational costs. 

A recent report noted that higher labor costs, driven by Malaysia’s minimum wage hike in February 2025, further eroded margins, with labor accounting for 5% of production costs.

Despite these challenges, BP Plastics remains optimistic about the long-term outlook. 

“We see steady demand for flexible packaging and are focused on maintaining profitability,” the spokesperson added. 

The company is exploring cost-control measures and efficiency improvements to navigate the turbulent market. 

Recent industry updates indicate BP Plastics is also investing in sustainable packaging solutions to meet growing demand for eco-friendly products, a move that could help offset some losses in traditional markets. 

This includes trials of biodegradable films, which have gained traction in Asia, though scaling production remains costly.

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