DaBomb Protein Biotech Corp. shareholders approved a cash dividend of 0.55 yuan, a strategy to optimize gross margin that has proven effective. New production lines are completed on schedule, and CDMO business will officially launch.

[ DaBomb Protein Biotech Corp. (6578) 2024 Annual General Meeting Press Release] Release Date: June 27, 2024

DaBomb Protein Biotech Corp. (Taiwan Stock Exchange code: 6578) held its 2024 Annual General Meeting today, where it approved its 2023 financial statements and approved a cash dividend of NT$0.55 per share from capital reserves. To reduce cost volatility and create stable profits, the company is developing high-value-added products and focusing on optimizing gross margins. In the first half of 2023, the revenue share of functional additives continued to increase, and with new capacity coming online from the fermentation production line in the second half of the year, gross margins are expected to improve further, demonstrating the effectiveness of the company's transformation.

Over the past two years, DaBomb Protein Biotech Corp. has faced significant challenges from the overall environment, including soaring raw material costs, a sluggish aquaculture industry, and export price pressures due to exchange rate fluctuations. As a result, revenue decreased by 11.35% to NT$384 million in 2023. However, the company actively adjusted its order structure, and its gross profit margin increased quarter by quarter in 2023, reaching a full-year gross profit margin of 12.08%, the highest since 2021. Due to the board's decision to cease operations at the Zhangzhou plant in the third quarter of 2023, a loss of NT$60.45 million was recognized, resulting in a net loss after tax of NT$57.03 million for DaBomb DaBomb Protein Biotech Corp. DaBomb Protein Biotech Corp. in 2023. Excluding the Zhangzhou plant loss, the plant itself had already turned a profit in 2023.

DaBomb Protein Biotech Corp. revenue in the first quarter of this year was slightly higher than the same period last year, but its gross margin improved to 18.08%, with a net profit after tax of NT$6.85 million and earnings per share (EPS) of NT$0.11. The company's overall operations successfully turned from loss to profit. The key factor was the steady increase in shipments of high value-added functional additives. In terms of product revenue share, functional additives accounted for 11% of revenue in 2023, and this increased to 14% in the first five months of this year. As a result, DaBomb Protein Biotech Corp. gross margin has jumped for two consecutive years, and its profitability has improved significantly despite no increase in revenue.

To expand its functional additive production capacity and meet the needs of CDMO customers, DaBomb Protein Biotech Corp. increased its capital expenditure in 2023, adding two 20KL fermentation tank production lines at its technology plant. The addition is scheduled to be completed in June this year, with commissioning expected to be completed in July-August. The CDMO business can be officially launched in the fourth quarter. If the proportion of high value-added products can be further increased, the benefits of continuous product portfolio optimization will be more significant.

While optimizing its gross profit margin, DaBomb Protein Biotech Corp. is also committed to net-zero carbon emissions. The company possesses low-carbon production technologies, including converting processing by-products into fertilizer and investing in heat recovery equipment to recover waste heat from steam boilers, which can reduce boiler water consumption by approximately 85%. Furthermore, through a comprehensive review and diagnosis conducted by the Materials and Chemicals Research Laboratories (MITR) team, the company has replaced outdated systems, improved energy conversion efficiency, and increased process stability, which is expected to reduce carbon emissions by 24.46%. This year, the company has received funding from the Ministry of Economic Affairs' "Manufacturing Low-Carbon and Smart Transformation Project Subsidy" program, and will strive towards its "net-zero carbon emissions by 2050" goal by implementing a dual-axis strategy of low-carbon and smart transformation.

However, Vietnam, DaBomb Protein Biotech Corp. main export market, experienced an outbreak of African swine fever last year. Although the outbreak gradually subsided in the second half of the year, cases have recently reappeared in six districts of Quang Ninh province in northern Vietnam, causing huge losses to the livestock industry. Demand for feed ingredients and functional additives has temporarily slowed down, which is expected to affect the company’s subsequent shipments. In addition, with the recent surge in ocean freight rates, the company will continue to face difficult challenges from the external environment in the third quarter.