LEFORM BERHAD Navigates Challenging Waters: A Q2 2025 Financial Review
Greetings, fellow investors! Today, we’re diving into the latest financial report from LEFORM BERHAD, a key player in Malaysia’s steel products sector, for the quarter ended 30 June 2025. This report offers a crucial snapshot of the company’s performance amidst an evolving economic landscape, revealing a mixed bag of results with notable profit growth for the quarter despite a dip in revenue. Let’s unpack the numbers and see what they tell us about LEFORM’s journey and future prospects.
Financial Highlights: Profitability Rises Despite Revenue Decline
LEFORM BERHAD’s second quarter of 2025 shows a resilient performance in terms of profitability, even as the company grappled with lower revenue figures. The individual quarter saw a significant boost in profit before tax and earnings per share, reflecting effective cost management and other operational gains. However, a broader look at the cumulative year-to-date figures presents a more cautious picture, with overall revenue and cumulative profits facing headwinds.
Individual Quarter Performance (Q2 2025 vs Q2 2024)
- Revenue: RM82,028k
- Profit Before Tax: RM625k
- Profit for the Period: RM675k
- Earnings Per Share (Basic): 0.04 sen
Corresponding Quarter (Q2 2024)
- Revenue: RM97,352k
- Profit Before Tax: RM346k
- Profit for the Period: RM188k
- Earnings Per Share (Basic): 0.02 sen
For the individual quarter ended 30 June 2025, LEFORM BERHAD reported a revenue of RM82.03 million, a decrease of 15.7% from RM97.35 million in the corresponding quarter of 2024. Despite this revenue dip, profit before tax surged by an impressive 80.6% to RM0.63 million, compared to RM0.35 million previously. This led to a profit for the period of RM0.68 million, a substantial increase from RM0.19 million in Q2 2024. Basic earnings per share (EPS) also reflected this positive trend, rising from 0.02 sen to 0.04 sen.
Cumulative Quarter Performance (YTD Q2 2025 vs YTD Q2 2024)
- Revenue: RM164,596k
- Profit Before Tax: RM854k
- Profit for the Period: RM780k
- Earnings Per Share (Basic): 0.06 sen
Corresponding Cumulative Quarter (YTD Q2 2024)
- Revenue: RM204,254k
- Profit Before Tax: RM1,971k
- Profit for the Period: RM1,935k
- Earnings Per Share (Basic): 0.14 sen
Looking at the cumulative six months ended 30 June 2025, revenue stood at RM164.60 million, a 19.4% decrease from RM204.25 million in the same period last year. Consequently, profit before tax for the cumulative period also decreased by 56.7% to RM0.85 million, down from RM1.97 million. Basic EPS for the cumulative period was 0.06 sen, lower than the 0.14 sen recorded in the previous corresponding period.
Diving Deeper: Performance by Business Segment
LEFORM operates across three main segments: Manufacturing, Trading, and Transportation. Understanding their individual contributions helps paint a clearer picture of the overall performance.
Manufacturing Segment
The Manufacturing segment, which produces steel pipes, guardrails, and flat steel products, experienced a significant downturn. Revenue for the current quarter decreased by 19.4% to RM70.79 million from RM87.79 million in the corresponding quarter last year. The decline was primarily attributed to lower average selling prices. This impact was more pronounced in the cumulative period, where revenue fell by 22.9% to RM143.52 million, also due to reduced construction project revenue and lower average selling prices.
Profit before tax for manufacturing mirrored this trend, plummeting by 86.5% to RM0.26 million for the current quarter (Q2 2025) from RM1.94 million in Q2 2024. The cumulative profit before tax also saw a sharp decline of 78.3% to RM0.79 million from RM3.62 million. While margins remained relatively resilient, the reduced revenue base, coupled with stable overheads, squeezed profitability. The report notes that a higher gain on disposal of motor vehicles and lower provisioning for slow-moving inventories and trade receivables in the current quarter provided some mitigation.
Trading Segment
The Trading segment, which complements the manufacturing arm by trading steel products, also saw a revenue decrease of 8.4% to RM26.98 million for the current quarter from RM29.45 million in Q2 2024, again mainly due to lower average selling prices. The cumulative revenue for this segment decreased by 26.4% to RM48.65 million from RM66.11 million.
Interestingly, the Trading segment’s profit before tax increased to RM0.32 million in the current quarter, a significant improvement from RM0.02 million in the corresponding quarter last year. This was primarily driven by higher trading margins. However, the cumulative period recorded a loss before tax of RM0.06 million, contrasting with a profit of RM0.41 million in the prior cumulative period, reflecting the impact of lower average selling prices on the overall revenue base.
Transportation Segment
The Transportation segment recorded a slight decrease in revenue for the current quarter to RM0.62 million from RM0.66 million, with a marginal increase in profit before tax to RM0.04 million from RM0.01 million. The fluctuations in this segment had no significant impact on the Group’s overall performance.
Financial Health: Balance Sheet and Cash Flow Snapshot
Let’s take a quick look at LEFORM’s financial position and cash movements.
| Metric (in thousands of RM) | As at 30-Jun-25 (Unaudited) | As at 31-Dec-24 (Audited) |
|---|---|---|
| Total Assets | 451,267 | 456,868 |
| Total Equity | 221,664 | 220,884 |
| Net Assets Per Share (sen) | 14.91 | 14.84 |
| Loans and Borrowings (Total) | 171,631 | 169,975 |
As of 30 June 2025, LEFORM’s total assets stood at RM451.27 million, a slight decrease from RM456.87 million at the end of 2024. Total equity, however, saw a minor increase to RM221.66 million from RM220.88 million, leading to a marginal rise in net assets per share to 14.91 sen from 14.84 sen. Total loans and borrowings increased slightly to RM171.63 million from RM169.98 million.
Cash Flow Dynamics
From a cash flow perspective, the Group generated more cash from operating activities in the first six months of 2025, with net cash from operations rising to RM10.18 million from RM8.60 million in the corresponding period last year. Net cash used in investing activities significantly reduced to RM7.82 million from RM18.44 million, mainly due to lower purchases of property, plant, and equipment. However, net cash used in financing activities increased to RM13.22 million from RM11.71 million, primarily due to higher net repayments of loans and borrowings.
Risks and Prospects: Navigating Global Currents and Domestic Growth
LEFORM BERHAD acknowledges the dynamic operating environment, shaped by global and domestic factors. While global geopolitical tensions, trade policies, and new tariff structures present uncertainties, Malaysia’s economy is projected to grow between 4.0% and 4.8% in 2025, according to Bank Negara Malaysia. The recent 25 basis point reduction in the Overnight Policy Rate (OPR) to 2.75% is expected to stimulate the construction and property sectors, potentially boosting demand for steel-related products.
The company notes that while the United States’ 19% tariff on selected imports has minimal direct impact on LEFORM as they do not export to that market, they remain vigilant about potential ripple effects such as market volatility and cost fluctuations. Closer to home, the upcoming mid-term review of the 13th Malaysia Plan (MP13) and Budget 2026 are anticipated to reinforce the government’s focus on infrastructure development, which could be a strong tailwind for LEFORM’s business.
Operationally, LEFORM is making strategic moves with its new integrated warehouse facility, scheduled to commence operations by Q4 2025. This facility is poised to significantly expand storage capacity, enhance production efficiency, and strengthen the company’s ability to meet customer demand and support future growth. The management remains committed to operational excellence, prudent cost management, and leveraging its strong domestic presence to navigate uncertainties.
Summary and Outlook
LEFORM BERHAD’s Q2 2025 results present a mixed but strategically sound picture. While the decline in overall revenue, especially in the Manufacturing segment due to lower average selling prices, remains a key challenge, the company demonstrated strong profitability growth in the current quarter, thanks to improved trading margins and effective cost management. The increase in net cash from operating activities also highlights a healthier operational cash generation.
Looking ahead, LEFORM is positioning itself to capitalize on potential domestic tailwinds, particularly from infrastructure development initiatives and a supportive monetary policy. The investment in a new integrated warehouse facility underscores its commitment to long-term growth and operational efficiency. However, external factors such as global trade tensions and market volatility will require continuous monitoring.
Key areas for investors to consider going forward:
- The company’s ability to stabilize or improve average selling prices for its steel products.
- The impact of government infrastructure spending on the demand for LEFORM’s offerings.
- The successful commissioning and utilization of the new integrated warehouse facility by Q4 2025.
- Management’s strategies to mitigate risks from global trade dynamics and cost fluctuations.
From a professional perspective, LEFORM BERHAD’s focus on internal efficiencies and strategic capacity expansion, despite external market pressures on pricing, appears to be a prudent approach. The improved profit before tax for the individual quarter, driven by higher trading margins and other operational gains, indicates that the company is actively seeking ways to enhance profitability even when top-line growth is challenging. The increase in cash from operations is also a positive sign, providing liquidity to support its strategic initiatives.
What do you think? Can LEFORM BERHAD effectively leverage the anticipated boost in Malaysia’s construction and property sectors to overcome the current revenue headwinds? Share your thoughts in the comments below!
For more in-depth analysis of Malaysian market reports, check out our other articles.
