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Oriental Holdings Q2 2025: Revenue Rises, But Forex Headwinds Lead to a Loss
Oriental Holdings Berhad, a diversified conglomerate with interests spanning from automotive to plantations, has just unveiled its financial results for the second quarter ending June 30, 2025. The report presents a mixed picture: while the company achieved solid revenue growth, its bottom line swung into a loss, largely due to significant foreign exchange pressures. However, in a strong show of confidence, the board has proposed a generous dividend, leaving investors with much to analyze.
Despite the quarterly loss, the Board of Directors has proposed an interim single-tier dividend of 20 sen per ordinary stock. This move signals management’s confidence in the Group’s underlying operational strength and healthy cash flow.
Core Financials: A Tale of Two Halves
At a glance, the top-line performance looks encouraging. The Group’s revenue for the quarter saw a healthy increase compared to the same period last year. However, the profit figures tell a different story, shifting from a profit to a significant loss. This was primarily driven by non-cash unrealised foreign exchange losses on borrowings denominated in foreign currencies.
Q2 2025 (Current Quarter)
Revenue: RM 1.26 billion
Profit Before Tax: (RM 39.3 million)
Net Loss Attributable to Stockholders: (RM 59.7 million)
Basic Loss Per Share: (9.62 sen)
Q2 2024 (Comparative Quarter)
Revenue: RM 1.18 billion
Profit Before Tax: RM 47.3 million
Net Profit Attributable to Stockholders: RM 38.2 million
Basic Earnings Per Share: 6.16 sen
For the first half of the year, revenue grew by 13.0% to RM 2.68 billion. The profit before tax, however, saw a steep decline. It’s crucial to note that the comparative period in 2024 included a substantial one-off gain of RM 209.8 million from the disposal of the Bayview Eden Melbourne Hotel, which significantly inflates the prior year’s profit figures.
Diving into Segment Performance
A closer look at the Group’s diverse business segments reveals a varied performance landscape for the first half of 2025.
| Business Segment | H1 2025 Revenue | H1 2025 Operating Profit/(Loss) | Key Highlights |
|---|---|---|---|
| Automotive | RM 1.52 billion | RM 96.0 million | Revenue grew 14.4%, but profit fell 25.8%. Singapore sales volume surged, but high COE prices squeezed margins. Malaysian operations saw growth from new BYD models. |
| Plantation | RM 625.0 million | RM 60.6 million | Strong revenue growth of 51.7% from higher CPO prices and volume. However, profit was heavily dampened by RM 131.3 million in forex losses on borrowings. |
| Hotels and Resorts | RM 121.3 million | RM 37.3 million | Revenue and profit declined, partly due to lower occupancy. The significant drop in operating profit is mainly because the prior year included a large one-off gain from a hotel sale. |
| Investment Holding | RM 2.3 million | (RM 128.5 million) | Swung to a major operating loss, almost entirely due to RM 103.3 million in realised and unrealised forex losses on foreign currency borrowings. |
Risks and Future Outlook
Oriental Holdings is navigating a complex global economic environment. The management has identified several key areas of focus, opportunities, and potential risks for the remainder of the year.
The Forex Elephant in the Room: The most significant headwind this quarter was the volatility of foreign exchange rates. The weakening of the Indonesian Rupiah (IDR), US Dollar (USD), and Malaysian Ringgit (MYR) against the Japanese Yen (JPY) and Swiss Franc (CHF) resulted in substantial unrealised losses on the Group’s foreign-denominated borrowings. The management has emphasized that these are non-cash losses and do not impact the Group’s strong operating cash flow.
Strategic Moves and Industry Trends:
- Automotive: The industry is rapidly shifting towards electrification. The launch of the Honda e:N1 in Malaysia is a key step, but the market remains highly competitive, especially with the aggressive entry of Chinese brands.
- Plantation: With CPO prices forecast to remain firm, the segment’s outlook is positive. The key challenge remains managing the forex exposure on its borrowings effectively.
- Hotels & Resorts: The transition of the Australia and New Zealand hotel portfolio to a third-party operator is a strategic move expected to drive efficiency and profitability in the long run.
- New Ventures: The company is actively seeking growth, highlighted by its MOU with LBS Bina Group to develop a 561-acre mixed-development project in Melaka, signaling a long-term strategic vision.
Summary and Outlook
In summary, Oriental Holdings’ Q2 2025 results reflect a company with robust core operations facing significant external pressures, particularly from foreign exchange markets. The strong revenue growth across key segments like Automotive and Plantation is a testament to its market position. The declared dividend, despite the reported loss, underscores the Board’s confidence in the company’s financial health and cash-generating ability, distinguishing between non-cash accounting losses and actual operational performance.
Looking ahead, the Group’s performance will be heavily influenced by its ability to manage currency risks and navigate the competitive landscapes of its core businesses. Key risk factors to monitor include:
- Foreign Exchange Volatility: Continued fluctuations in currency markets could further impact profitability on its foreign-denominated borrowings.
- Automotive Market Competition: Intense competition and margin pressure from new entrants and the global shift to EVs could challenge profitability.
- Commodity Price Fluctuation: The plantation segment’s earnings remain sensitive to the global prices of Crude Palm Oil (CPO).
- Execution of Strategic Initiatives: Successful execution of the hotel management transition and the new property development venture will be crucial for future growth.
Final Thoughts
From my professional viewpoint, this report demonstrates the importance of digging deeper than the headline numbers. While the net loss may seem alarming, the context of non-cash forex losses and the absence of a prior-year one-off gain reveals a more resilient underlying business. The 20 sen dividend is a powerful statement from management, suggesting they believe the current headwinds are manageable and the company’s long-term fundamentals remain solid.
What are your thoughts on Oriental Holdings’ performance? Do you think the company can successfully navigate the forex challenges in the coming quarters?
Share your views in the comments section below!
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