Ornapaper’s Latest Report: Revenue Edges Up, But Profits Take a Tumble
Ornapaper Berhad, a significant player in Malaysia’s corrugated board and carton manufacturing sector, has just released its financial results for the quarter ended June 30, 2025. The report reveals a challenging period for the company, showcasing a classic scenario where higher sales volume doesn’t necessarily translate to higher profits. While revenue saw a slight uptick, profitability was significantly squeezed by market pressures.
The headline figures show a 2.06% increase in quarterly revenue, but a sharp 84.42% drop in profit before tax compared to the same quarter last year. Let’s dive deeper into the numbers to understand the forces at play and what this means for the company’s outlook.
Core Financials: A Closer Look at the Numbers
The second quarter of 2025 presented a mixed financial performance. While the company managed to grow its revenue, profitability faced a steep decline, highlighting the intense pressure on margins.
Q2 2025 Results
Revenue: RM 69.34 million
Gross Profit: RM 7.77 million
Profit Before Tax: RM 0.25 million
Net Profit: RM 0.21 million
Earnings Per Share: 0.24 sen
Q2 2024 Results
Revenue: RM 67.95 million
Gross Profit: RM 8.36 million
Profit Before Tax: RM 1.58 million
Net Profit: RM 0.94 million
Earnings Per Share: 1.23 sen
According to the report, the 2.06% rise in revenue for the quarter was driven by higher sales volume. However, this positive was overshadowed by lower average selling prices and increased operational costs, which caused the profit before tax to plummet from RM1.58 million to just RM0.25 million.
Segment Performance Breakdown
Analyzing the performance over the first six months of the year, it’s clear that the company’s core segments are facing distinct challenges.
| Segment (6 Months Ended June 30) | Revenue (2025) | Revenue (2024) | Profit/Loss After Tax (2025) | Profit/Loss After Tax (2024) |
|---|---|---|---|---|
| Corrugated Board & Carton | RM 150.67 million | RM 151.44 million | RM 2.07 million | RM 3.64 million |
| Paper Stationery Products | RM 7.33 million | RM 10.40 million | (RM 0.96 million) | (RM 0.66 million) |
- Corrugated Board & Carton: This primary segment saw a marginal 0.5% dip in revenue due to lower average selling prices. More significantly, its profit after tax fell by nearly 43%, reflecting the severe margin compression in the market.
- Paper Stationery Products: This segment struggled with a 29.5% drop in revenue, which the company attributes to lower sales volumes. Consequently, its net loss widened from RM0.66 million to RM0.96 million.
Financial Health and Position
On a positive note, Ornapaper’s balance sheet shows prudent financial management. The company successfully reduced its total borrowings from RM99.8 million at the end of 2024 to RM89.9 million as of June 30, 2025. This deleveraging is a healthy sign. Furthermore, the net assets per share attributable to owners saw a slight increase, rising to RM2.70 from RM2.66 at the end of the previous fiscal year.
The company also paid a final single-tier dividend of 2 sen per share for the financial year 2024 on May 20, 2025, returning value to its shareholders. No dividend was declared for the current quarter under review.
Navigating a Challenging Market Landscape
The company’s management is candid about the difficult road ahead. The report highlights that the corrugated carton industry is grappling with weak demand, overcapacity, and intense price competition. These internal market factors are compounded by external economic headwinds, including uncertainties from US trade policies and the ongoing US-China trade disputes, which create weak market sentiment.
In response to these challenges, Ornapaper has stated its strategy is to “continue to focus on cost optimization and operating efficiency to overcome the challenging operating environment.” This focus will be critical in protecting its bottom line in the coming months.
Summary and Outlook
Ornapaper’s latest quarterly results paint a picture of a resilient company facing significant industry-wide headwinds. While maintaining sales volume is commendable, the severe erosion of profit margins is a major concern. The company’s strong balance sheet, reduced debt, and stable asset base provide a solid foundation to weather this storm. However, the path forward appears challenging.
The outlook for the remainder of the year is expected to remain tough. The company’s success will heavily depend on its ability to execute its cost-control and efficiency strategies effectively amidst fierce competition and uncertain global economic conditions. Investors will be keenly watching for signs of margin recovery in the upcoming quarters.
Key risks to monitor include:
- Continued pressure on selling prices due to intense market competition.
- Weak market demand and persistent overcapacity in the industry.
- Potential for further increases in operational costs.
- Negative impacts from global trade disputes and economic slowdown.
Final Thoughts
From my perspective, this report highlights a classic case of a company navigating a tough, cyclical industry. The top-line revenue stability is encouraging, but the sharp decline in profitability underscores the severity of the market pressures. The management’s ability to execute its cost optimization strategy will be the key factor to watch in the upcoming quarters.
Do you think Ornapaper can successfully navigate these challenges and restore its profit margins? Share your views in the comments below!
