RALCO CORPORATION BERHAD: Navigating Challenging Waters in Q2 2025
Hello fellow investors! Today, we’re diving into the latest financial disclosures from RALCO CORPORATION BERHAD for its second quarter ended 30 June 2025. This report offers a crucial snapshot of the company’s performance and strategic direction amidst a dynamic market landscape.
While the overall picture presents a significant decline in revenue and increased losses, it also highlights the company’s efforts to adapt. We’ll explore the key financial figures, understand the factors contributing to these results, and look at what RALCO is doing to navigate future challenges. Let’s delve into the details to understand the journey of this Malaysian player.
Core Data Highlights: A Closer Look at Performance
Overall Financial Performance: Revenue and Profitability
RALCO CORPORATION BERHAD experienced a challenging second quarter and first half of 2025. Both the individual quarter and the cumulative six-month period saw substantial declines in revenue and a significant increase in losses compared to the same periods last year.
Current Quarter (Q2 2025)
Revenue: RM 8,653,000
Loss Before Taxation: RM (3,671,000)
Loss After Taxation: RM (3,699,000)
Basic Loss Per Share: (7.28) sen
Previous Year’s Corresponding Quarter (Q2 2024)
Revenue: RM 12,949,000
Loss Before Taxation: RM (921,000)
Loss After Taxation: RM (953,000)
Basic Loss Per Share: (1.88) sen
For the current quarter ended 30 June 2025, revenue decreased by a substantial RM 4.296 million, or 33%, compared to the same period last year. This sharp decline was primarily attributed to lower demand for both injection and blow moulding products. Consequently, the Loss Before Taxation surged by 299%, from RM 921,000 to RM 3.671 million, further exacerbated by higher production costs.
Current Cumulative Period (H1 2025)
Revenue: RM 17,368,000
Loss Before Taxation: RM (7,186,000)
Loss After Taxation: RM (7,241,000)
Basic Loss Per Share: (14.25) sen
Previous Year’s Corresponding Cumulative Period (H1 2024)
Revenue: RM 27,411,000
Loss Before Taxation: RM (1,450,000)
Loss After Taxation: RM (1,515,000)
Basic Loss Per Share: (2.98) sen
The cumulative performance for the first half of 2025 tells a similar story, with revenue falling by RM 10.043 million, a 37% drop from the previous year. The Loss Before Taxation ballooned by 396% to RM 7.186 million, indicating deepening operational challenges.
Segmental Performance: Plastic Products Under Pressure
A closer look at the segmental reporting reveals that the “Plastic Product” division, which forms the core of RALCO’s operations, was the primary driver of the overall decline. While the “Others” segment showed a slight increase in revenue and improved operating profit, its contribution could not offset the challenges faced by the main business.
6 Months Ended 30 June
| Segment | Revenue (RM’000, H1 2025) | Revenue (RM’000, H1 2024) | Segment Operating (Loss)/Profit (RM’000, H1 2025) | Segment Operating (Loss)/Profit (RM’000, H1 2024) |
|---|---|---|---|---|
| Plastic Product | 17,222 | 27,300 | (6,184) | (1,040) |
| Others | 146 | 111 | 166 | 42 |
| Consolidated | 17,368 | 27,411 | (6,018) | (998) |
The “Plastic Product” segment’s revenue decreased significantly from RM 27.300 million in H1 2024 to RM 17.222 million in H1 2025, leading to a much larger operating loss of RM 6.184 million compared to RM 1.040 million in the prior year.
Financial Position and Cash Flow: A Mixed Bag
Looking at the balance sheet as of 30 June 2025, total assets slightly decreased to RM 71.188 million from RM 77.636 million at 31 December 2024. Total equity also saw a reduction, standing at RM 33.465 million compared to RM 40.706 million previously, leading to a lower net assets per share of RM 0.66 (from RM 0.80).
On a more positive note, RALCO demonstrated improved cash flow from operating activities for the current six-month period. The Group generated RM 995,000 in net cash from operations, a significant turnaround from the RM (1,698,000) cash used in operating activities for the full year ended 31 December 2024. This indicates some success in managing working capital, with decreases in inventories and receivables. However, cash used in financing activities turned negative, largely due to repayments of lease liabilities and smaller advances from related parties.
Risks and Prospects: Navigating Uncertainty
RALCO acknowledges that its performance will continue to be significantly influenced by external factors. These include ongoing global economic uncertainty, which can impact demand and pricing, as well as fluctuations in raw material costs and operational expenses. The company also faces intense market competition, a perennial challenge in the manufacturing sector.
To counter these headwinds and enhance its financial performance, RALCO’s strategy moving forward is to rigorously focus on operational efficiency. This involves aligning production closely with expected customer demand, thereby aiming to optimise resource utilisation and minimise wastage. By maintaining a lean and responsive operational model, the company hopes to mitigate cost pressures and improve its bottom line.
While the market remains tough, the emphasis on efficient production and demand-driven operations is a sound strategy to maintain stability and work towards profitability.
Summary and Investment Recommendations
RALCO CORPORATION BERHAD’s Q2 2025 report clearly signals a challenging period marked by a notable contraction in revenue and an increase in losses. The primary driver of this performance was a significant drop in demand for its core plastic moulding products and higher production costs. While the “Others” segment provided a small positive contribution, it was insufficient to offset the headwinds in the main business unit.
Despite the adverse financial results, the company’s ability to generate positive cash flow from operations for the first half of the year is a crucial point to note. This suggests effective working capital management and an underlying operational capacity to generate cash, even in a difficult environment. The Board has not proposed an interim dividend for this period.
Looking ahead, RALCO is concentrating on operational efficiency and aligning production with customer demand to navigate global economic uncertainties, volatile raw material costs, and intense competition. Investors should be aware of the following key points:
- Significant Revenue Decline: Both quarterly and cumulative revenues saw substantial drops, indicating weakening market demand for core products.
- Increased Losses: Higher production costs and reduced sales led to a significant increase in pre-tax losses.
- Positive Operating Cash Flow: A notable shift from cash usage to generation in operating activities, signaling improved working capital management.
- Strategic Focus on Efficiency: The company’s strategy hinges on optimising production and aligning with demand to enhance future financial performance.
- No Dividend Declared: Reflecting the current challenging financial climate, no interim dividend was proposed.
It’s important for investors to consider these factors when assessing RALCO’s current standing and future potential.
