Navigating the Headwinds: A Deep Dive into AGRICORE CS Holdings’ Q1 2025 Performance
Greetings, fellow investors! Today, we’re unboxing the latest financial report from AGRICORE CS Holdings Berhad for the first quarter ended 31 March 2025. As a prominent player in Malaysia’s agricultural product sourcing and food additive production, AGRICORE CS’s performance offers valuable insights into the broader economic landscape and the specific challenges and opportunities within its sector. While the report reveals a slight dip in revenue, a closer look at the numbers and the company’s strategic responses paints a more nuanced picture. Let’s delve into the details to understand what’s truly driving their results and what lies ahead.
Key Financial Highlights: A Mixed Bag
AGRICORE CS’s Q1 2025 results present a mixed financial performance, showcasing both areas of strength and segments facing headwinds. Here’s a snapshot of the core figures:
Revenue Performance
Q1 2025 Revenue
RM36.65 million
Q1 2024 Revenue
RM36.86 million
The Group recorded a slight decrease in revenue by RM0.21 million, or 0.57%, compared to the corresponding quarter of the preceding year. This marginal decline was primarily influenced by a reduction in revenue from the production of food additives and fried shallots, which offset growth in their core plant-based agricultural products segment.
Profitability Trends
Q1 2025 Profit Before Tax (PBT)
RM0.96 million
Q1 2024 Profit Before Tax (PBT)
RM1.99 million
Profit before tax saw a more significant contraction, decreasing by RM1.03 million, or 51.76%, compared to the same period last year. This notable decline was attributed to several factors:
- An increase of RM0.28 million in warehouse rental and labor costs, primarily from the new regional storage facility that commenced operations in September 2024.
- Higher depreciation of property, plant, and equipment, and right-of-use assets by RM0.21 million.
- Increased forwarding and shipping costs by RM0.37 million, driven by higher raw material imports and a 2% rise in full load container charges during the quarter.
Q1 2025 Profit After Tax (PAT)
RM0.68 million
Q1 2024 Profit After Tax (PAT)
RM1.50 million
Consequently, net profit after tax followed suit, decreasing by RM0.82 million, or 54.67%, to RM0.68 million for the quarter.
Earnings Per Share (EPS)
Q1 2025 Basic/Diluted EPS
0.33 sen
Q1 2024 Basic/Diluted EPS
1.00 sen
It’s important to note the significant change in the number of ordinary shares in issue. The current quarter’s EPS is calculated based on 202.8 million shares, whereas the corresponding quarter last year was based on 151.086 million shares before the IPO on June 21, 2024. This increase in share count naturally impacts the per-share metrics, making direct comparisons without context less informative.
Segmental and Quarterly Performance Deep Dive
To truly understand AGRICORE CS’s trajectory, let’s break down the performance by business segment and compare it against the immediate preceding quarter.
Business Segment Performance
The Group’s revenue composition highlights a shift:
- Sourcing and distribution of plant-based agricultural products: This segment showed resilience, with revenue increasing by RM1.03 million to RM33.37 million in Q1 2025, up from RM32.34 million in Q1 2024. This indicates healthy demand in their core business.
- Production of food additives and fried shallots: This segment experienced a decline, contributing RM3.28 million in Q1 2025, down from RM4.51 million in Q1 2024, a decrease of RM1.23 million. This was the primary driver for the overall revenue dip.
Geographically, Malaysia remains the Group’s principal market, accounting for approximately 99.6% of total revenue, demonstrating strong domestic focus.
Comparison with Immediate Preceding Quarter (Q1 2025 vs Q4 2024)
Looking at the quarter-on-quarter performance provides a different perspective:
| Metric | Q1 2025 (RM’000) | Q4 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 36,650 | 37,121 | (1.27)% |
| Gross Profit | 4,376 | 3,565 | 22.75% |
| Profit Before Tax | 960 | 108 | 788.89% |
| Profit After Tax | 679 | 68 | 898.53% |
While revenue slightly decreased, the Group reported significantly higher gross profit, profit before tax, and profit after tax compared to the immediate preceding quarter. This remarkable improvement was mainly due to an increase in gross profit margin, attributed to a better sales mix and improved overall product margins across both the Sourcing and Distribution segment and the Food Additives and Fried Shallots segment.
Financial Health and Cash Flow
The balance sheet as of 31 March 2025 shows a slight increase in total assets to RM88.00 million from RM86.31 million at the end of 2024. Total equity also saw a modest rise, primarily due to retained earnings. Net assets per ordinary share remained stable at RM0.27.
From a cash flow perspective, the Group utilized less cash in operating activities in Q1 2025 (RM2.43 million used) compared to Q1 2024 (RM6.58 million used), which is a positive sign. However, net cash from financing activities was lower this quarter, leading to a net decrease in cash and cash equivalents of RM0.77 million. Despite this, the cash and cash equivalents at the end of the period stood at a healthy RM15.83 million.
Strategic Outlook and Potential Headwinds
AGRICORE CS acknowledges the challenging business environment for the current financial year. However, they remain optimistic about their long-term prospects, driven by the inherent structural growth in demand for food products. The company is actively implementing expansion strategies to maintain competitiveness and profitability.
Key strategies include:
- Optimizing the usage and efficiency of their new regional storage facility in Klang.
- Actively exploring new export markets to diversify revenue streams.
- Introducing new SKU (Stock Keeping Unit) products to the markets to cater to evolving consumer demands.
Despite the current headwinds, the Group is cautiously optimistic that its performance for the coming and remaining quarters of the financial year will remain positive, barring any unforeseen circumstances. This outlook is anchored on their proactive measures to enhance operational efficiency and market reach.
Summary and
AGRICORE CS Holdings Berhad’s Q1 2025 report reveals a company navigating a complex operating environment. While year-on-year profitability saw a decline due to increased operational costs associated with expansion and higher logistics expenses, the quarter-on-quarter performance shows a significant rebound in profitability, driven by improved gross profit margins and a better sales mix. This suggests that the initial costs of their new regional storage facility are being managed, and their core business segments are finding stronger footing.
The slight dip in overall revenue was mainly due to the food additives and fried shallots segment, while the larger plant-based agricultural products segment continued to grow. This highlights the importance of monitoring the performance of individual business units. The company’s strategic focus on optimizing new facilities, exploring export markets, and introducing new products is crucial for its future growth trajectory.
Key points for investors to consider going forward:
- Operational Cost Management: How effectively will AGRICORE CS manage the rising operational costs, especially those related to the new regional storage facility? Continued efficiency gains will be vital for margin recovery.
- Segmental Performance: Will the food additives and fried shallots segment recover its contribution, or will the plant-based agricultural products continue to be the primary growth engine?
- Market Expansion: The success of exploring new export markets and introducing new SKUs will be key indicators of future revenue diversification and growth.
- Overall Economic Environment: The broader challenging business environment, including fluctuating raw material prices and logistics costs, will continue to impact their financial performance.
What are your thoughts on AGRICORE CS’s latest performance? Do you believe their strategic initiatives will effectively counter the prevailing challenges and drive sustained growth in the upcoming quarters? Share your insights in the comments section below! Let’s discuss how Malaysian retail investors can best interpret these results and what they might mean for the company’s journey ahead.
Stay tuned for more in-depth analyses of Malaysian companies!
