InNature Berhad’s 2Q2025 Performance: Navigating Retail Headwinds with a Taste of F&B Growth
Hello fellow investors and market watchers!
Today, we’re diving into the latest financial report from InNature Berhad, a familiar name in Malaysia’s vibrant retail and, more recently, food and beverage (F&B) sectors. As a company that brings well-known brands to consumers, its performance offers valuable insights into the broader economic landscape and evolving consumer trends.
The second quarter ended 30 June 2025 reveals a period of strategic navigation for InNature. While the group encountered a challenging retail environment, its new F&B venture provided a notable buffer. Despite a dip in year-on-year profitability, the company maintained its dividend payout, reflecting a commitment to shareholder returns. Let’s break down the numbers and see what’s truly shaping InNature’s journey.
Core Data Highlights: A Tale of Two Segments
InNature’s latest quarter, the period ending 30 June 2025, shows a group actively navigating a dynamic market. Here’s a quick look at the key figures compared to the same period last year:
Quarterly Performance (2Q2025 vs 2Q2024)
2Q2025 Revenue: RM30.1 million
2Q2025 Profit After Tax (PAT): RM0.62 million
2Q2025 Basic Earnings Per Share: 0.09 sen
2Q2024 Revenue: RM31.3 million
2Q2024 Profit After Tax (PAT): RM1.47 million
2Q2024 Basic Earnings Per Share: 0.21 sen
Overall, InNature reported a 3.8% decline in total group revenue to RM30.1 million for the second quarter of 2025 compared to RM31.3 million in the same quarter last year. More significantly, Profit After Tax (PAT) saw a substantial dip of 57.4%, settling at RM0.62 million from RM1.47 million previously. Basic Earnings Per Share followed suit, dropping from 0.21 sen to 0.09 sen.
However, it’s not all downtrend. Looking at the quarter-on-quarter performance (2Q2025 versus 1Q2025), InNature managed to achieve a 24.7% increase in PAT, demonstrating some sequential recovery despite a slight revenue dip. This quarter-on-quarter improvement is an important indicator of management’s efforts to stabilise performance.
Year-to-Date Performance (1H2025 vs 1H2024)
1H2025 Revenue: RM61.1 million
1H2025 Profit After Tax (PAT): RM1.12 million
1H2025 Basic Earnings Per Share: 0.16 sen
1H2024 Revenue: RM62.8 million
1H2024 Profit After Tax (PAT): RM3.83 million
1H2024 Basic Earnings Per Share: 0.54 sen
For the first half of 2025, group revenue was lower by 2.7% year-on-year at RM61.1 million, while PAT was also correspondingly lower due to weaker topline performance and reduced gross profit margins.
Delving Deeper: Segment Performance
The report clearly illustrates a split in performance between InNature’s two core business segments:
Retail Business: Facing Headwinds
2Q2025 Retailing Revenue: RM25.2 million
2Q2025 Retailing PAT: RM0.16 million
2Q2024 Retailing Revenue: RM31.3 million
2Q2024 Retailing PAT: RM1.75 million
The retailing business, the traditional backbone of InNature, experienced a significant contraction. Revenue shrunk by 19.5% to RM25.2 million in 2Q2025 from RM31.3 million in 2Q2024, with the majority of this decline coming from Malaysia. This was largely attributed to fluctuating consumer confidence and ongoing supply chain instability, which particularly impacted the Malaysian operations. The shift of the Hari Raya festivity calendar to the first quarter of 2025 also impacted quarter-on-quarter retail sales.
Despite these challenges, InNature’s digital channels continue to be a silver lining. In the first half of 2025, digital revenue grew to RM5.0 million from RM4.1 million in the same period last year, now contributing 9.8% to the group’s retailing revenue (up from 6.5%). This highlights a successful pivot towards online engagement and sales.
Regarding physical presence, the group reported a net closure of one retail outlet in Vietnam in the first half of 2025, bringing the total outlet count to 105 as of 30 June 2025.
F&B Business: A New Growth Engine
2Q2025 F&B Revenue: RM4.9 million
2Q2025 F&B PAT: RM0.87 million
2Q2024 F&B Revenue: Not applicable (InNature diversified into F&B in August 2024)
2Q2024 F&B PAT: Not applicable (InNature diversified into F&B in August 2024)
The F&B segment, a new addition since August 2024, proved to be a critical mitigant for the group’s overall performance. It contributed RM4.9 million in revenue and RM0.87 million to PAT in 2Q2025. This segment also showed strong sequential growth, with revenue up 8.3% and PAT up 11.0% compared to 1Q2025. This positive momentum is largely due to new menu offerings and increased tourist arrivals benefiting their single restaurant at Suria KLCC.
Key Financial Ratios and Health
InNature continues to maintain a healthy balance sheet, reporting a net cash position of RM41.7 million as of 30 June 2025. This includes cash and cash equivalents, fixed income funds, and fixed deposit placements. The net gearing ratio stands at a negative 0.33 times, signifying that the company holds more cash than its total borrowings – a strong financial position, especially in uncertain times. This is a slight change from 31 December 2024’s negative 0.36 times.
Let’s look at the margins for the quarter:
| Metric | 2Q2025 | 2Q2024 | Change |
|---|---|---|---|
| Gross Profit Margin | 64.7% | 66.2% | -1.5% |
| PBT Margin | 3.1% | 6.6% | -3.5% |
| PAT Margin | 2.1% | 4.7% | -2.6% |
The decline in margins reflects the lower revenue and profitability from the retail segment. The effective tax rate also increased to 32.9% from 29.5%, partly due to non-deductible expenses and unrecognised deferred tax assets from loss-making subsidiaries.
Risk and Prospect Analysis: Charting the Future
InNature’s management acknowledges the “fluid operating environment” and “rising cost of doing business.” These are tangible risks that could impact future performance.
Anticipated Challenges:
- Consumer Confidence: Lingering uncertainties can dampen discretionary spending, directly impacting retail sales.
- Supply Chain: Continued instability could lead to higher costs and potential stock issues.
- Operational Costs: Rising inflation and other input costs could squeeze margins further across all segments.
- Foreign Exchange Fluctuations: As seen in the report, foreign exchange losses can impact corporate expenses and overall profitability, particularly for a group with regional operations.
Strategic Outlook & Opportunities:
Despite the challenges, InNature has laid out several strategic initiatives to drive future growth:
- Retail Supply Chain Stabilisation: Efforts are underway to improve the Malaysian retail business post-30 June 2025, which should address some of the current headwinds.
- Vietnam’s Momentum: The retail business in Vietnam is expected to sustain its positive momentum gained in 2Q2025, contributing to regional stability.
- F&B Expansion: The encouraging success of the Suria KLCC restaurant encourages further F&B development. A significant target is the opening of Indonesia’s first Burger & Lobster restaurant in Plaza Indonesia, slated for the fourth quarter of 2025. This marks a strategic expansion into a new, potentially lucrative market.
- Diversification Opportunities: The company hints at other diversification opportunities materialising, which could provide new avenues for growth and reduce reliance on traditional retail.
- Digital Growth: The continued strong growth in digital channels suggests a robust strategy to meet evolving consumer purchasing habits and expand market reach.
- IPO Proceeds Utilisation: The extension of the timeframe for capital expenditure utilisation from IPO proceeds until February 2026 allows for a more considered and effective deployment of funds, acknowledging past disruptions.
Summary and Investment Recommendations
InNature Berhad’s 2Q2025 report paints a picture of a company in transition, skillfully navigating a challenging retail landscape while actively cultivating a new growth segment in F&B. The retail business faced significant pressure from reduced consumer confidence and supply chain issues, leading to a notable decline in revenue and PAT compared to the previous year. However, the strong performance of the nascent F&B segment provided crucial support, demonstrating its potential as a new earnings driver.
The company’s robust net cash position, reflected in a negative net gearing ratio, provides a strong financial foundation for managing current headwinds and funding future expansion. While the overall profitability for the quarter was lower year-on-year, the sequential improvement in PAT from 1Q2025 highlights management’s responsive strategies. The consistent dividend declaration also signals confidence in its long-term viability, providing a steady return to shareholders.
Looking ahead, InNature’s prospects hinge on its ability to stabilize and reinvigorate its core retail operations, particularly in Malaysia, and successfully execute its F&B expansion plans, especially with the upcoming Burger & Lobster launch in Indonesia. Continued growth in digital channels will also be key to adapting to changing consumer behaviour.
Key risk points for investors to consider include:
- The persistent weakness in consumer confidence and its potential prolonged impact on the core retail business.
- The effectiveness and timeliness of strategies adopted to mitigate supply chain instability and rising operating costs.
- The execution risk associated with the expansion of the F&B segment into new, competitive markets like Indonesia.
- Exposure to foreign currency translation differences, which impacted total comprehensive income for the period.
Final Thoughts and Your Perspective
InNature Berhad’s latest report underscores a critical moment for the company. It’s a strategic pivot, with the F&B segment emerging as a promising avenue for growth, helping to offset a tougher retail environment. The commitment to digital sales and expansion into new markets and segments shows proactive management in a dynamic market.
Do you believe InNature’s F&B expansion can successfully offset persistent retail headwinds and become a significant growth driver in the coming years? What are your thoughts on their strategic diversification, and do you foresee a stronger second half of 2025 for InNature? We’d love to hear your views in the comment section below!
Stay tuned for more analyses of Malaysian companies!
