Evergreen Fibreboard’s Q2 2025 Results: Navigating Headwinds from Forex and Market Uncertainty
Evergreen Fibreboard Berhad, a prominent name in Malaysia’s wood-based panel industry, has released its financial results for the second quarter ended June 30, 2025. The report reveals a challenging period for the company, where external pressures significantly impacted profitability despite a relatively contained dip in revenue. While the top line saw a modest decline, the bottom line swung from a healthy profit to a net loss, a key development for investors to understand.
The headline figures from this quarter are telling: a 7.5% decrease in revenue led to a staggering 92.2% drop in Profit Before Tax. Let’s dive deeper into the numbers to understand the forces at play and the company’s strategic direction moving forward.
Core Data Highlights
A Challenging Quarter: Overall Financial Snapshot
The second quarter of 2025 proved to be a tough one for Evergreen Fibreboard. The company recorded a net loss, a sharp reversal from the profit seen in the same quarter last year. The primary drivers cited in the report were significant foreign exchange losses and increased operational costs, which overshadowed the company’s efforts on other fronts.
Q2 2025 (Current Quarter)
- Revenue: RM 237.94 million
- Profit Before Tax (PBT): RM 0.77 million
- Net Loss After Tax: (RM 3.66 million)
- Basic Earnings Per Share (EPS): (0.43) sen
Q2 2024 (Comparative Quarter)
- Revenue: RM 257.27 million
- Profit Before Tax (PBT): RM 9.88 million
- Net Profit After Tax: RM 6.00 million
- Basic Earnings Per Share (EPS): 0.71 sen
The report highlights an unfavorable foreign exchange movement of RM6.4 million, which was a major factor in the profit decline. This shows how susceptible the company’s earnings are to currency fluctuations, a key consideration for a business with significant international dealings.
A Tale of Three Regions: Segment Performance Breakdown
A look at the geographical segments reveals a mixed, but largely challenging, picture. While the core markets in Malaysia and Thailand faced significant headwinds, the “Others” segment provided a silver lining through improved operational efficiency.
| Segment | Revenue (Q2 2025) | Revenue (Q2 2024) | Profit/(Loss) Before Tax (Q2 2025) | Profit/(Loss) Before Tax (Q2 2024) |
|---|---|---|---|---|
| Malaysia | RM 88.70 million | RM 94.48 million | (RM 18.85 million) | (RM 11.56 million) |
| Thailand | RM 123.20 million | RM 133.65 million | RM 12.62 million | RM 19.53 million |
| Others | RM 26.05 million | RM 29.14 million | RM 7.01 million | RM 1.92 million |
- Malaysia: The domestic segment saw its pre-tax loss widen. This was attributed to lower sales volume as the furniture industry adopted a “wait-and-see” attitude due to US tariff uncertainty. Higher raw material costs from seasonal rainy weather and forex losses further compounded the issue.
- Thailand: Revenue and profit both declined. The story is similar to Malaysia, with lower sales volume, higher wood costs due to wet weather, and the impact of forex losses weighing on performance.
- Others: This segment was the standout performer. Despite a 10.6% drop in revenue, its profit before tax surged by over 260%. The company credited this impressive result to lower production costs driven by higher production efficiency, demonstrating successful operational improvements in this area.
First Half Performance: A Broader View
Looking at the first six months of 2025, the Group’s revenue actually saw a slight increase of 2.2% to RM490.74 million. However, the profit before tax for this period fell by 84.1% to RM2.97 million. This reinforces the narrative that while underlying business activity is holding up, profitability is being severely eroded by external factors, particularly a cumulative foreign exchange loss impact of RM13.6 million compared to the previous year.
Risk and Prospect Analysis
Navigating a Complex Global Landscape
Evergreen Fibreboard’s outlook is closely tied to both global trade dynamics and domestic economic factors. The management has identified several key areas of focus and concern.
Opportunities and Strategies:
- Indonesian Expansion: A key positive development is the new production line in Indonesia, which is reported to be running with improving productivity as scheduled. This expansion is a crucial part of the Group’s strategy to diversify its production base and capture new growth.
- Cost Management & Restructuring: Management has explicitly stated its commitment to closely monitor costs, especially with a new electricity tariff structure on the horizon in Malaysia. The company plans to continue its efforts to reduce operational costs and restructure operations to adapt to the evolving market conditions.
Potential Risks:
- Global Trade Uncertainty: The “evolving country-by-country tariff announcements from the US President” create significant uncertainty. This directly affects customer demand, as seen in the lower sales volumes this quarter, and remains a primary risk for the export-oriented furniture and panel board industry.
- Domestic Cost Pressures: Malaysian manufacturers will face a new electricity tariff in the second half of the year. The impact of this is yet to be fully quantified but represents a definite headwind for operational costs.
- Raw Material Volatility: The report cited seasonal weather as a cause for limited wood supply and higher costs. This highlights the inherent cyclical risk in the supply chain that can impact production costs and margins.
Summary and Investment Recommendations
In summary, Evergreen Fibreboard’s second-quarter results reflect a company grappling with significant external pressures. The sharp decline in profitability, driven primarily by adverse foreign exchange movements and market uncertainty over US tariffs, paints a challenging picture. Cost inflation from raw materials and upcoming utility tariff changes add further layers of complexity.
Despite these headwinds, there are positive takeaways. The impressive profit growth in the ‘Others’ segment due to efficiency gains shows that the company’s internal improvement initiatives can yield strong results. Furthermore, the steady progress of the new Indonesian facility is a promising sign for future growth and diversification. The key for investors will be to monitor how effectively the company can navigate the external risks while continuing to execute its internal strategies for operational excellence and expansion.
- Foreign Exchange Volatility: A primary risk factor that can significantly swing earnings from one quarter to the next.
- Geopolitical Trade Policies: The uncertainty surrounding US tariffs directly impacts customer confidence and sales volumes.
- Operational Cost Increases: Rising raw material and energy costs pose a continuous threat to margins.
Final Thoughts
From a professional standpoint, while the Q2 2025 results are undoubtedly concerning on the profit front, it’s crucial to distinguish between external shocks and internal weaknesses. The report suggests that much of the damage was caused by factors outside the company’s immediate control, such as forex markets and international trade policy. The company’s stated focus on cost control, operational efficiency, and strategic expansion in Indonesia are logical responses to build resilience. The critical question remains how long these external pressures will persist and how quickly the company’s strategic initiatives can begin to offset them.
What are your thoughts on the impact of US tariffs and rising domestic costs on Malaysian manufacturers like Evergreen Fibreboard? Do you believe the efficiency gains in the ‘Others’ segment can be replicated across the group’s larger operations?
Share your insights in the comments below! We’d love to hear your perspective.
