The Numbers Speak: A Closer Look at Performance

Volcano Berhad demonstrated commendable top-line growth across the board, reflecting strong market demand for its products. However, the journey to the bottom line faced some significant currency-related obstacles.

Overall Revenue Growth

The Group’s revenue for the current quarter saw a healthy surge, driven by consistent demand:

This represents an impressive increase of approximately 23.61% quarter-on-quarter. Looking at the cumulative period, the performance remains solid:

A growth of approximately 14.09% year-to-date, indicating a sustained positive trajectory. Compared to the immediate preceding quarter (Q2 FY2025), revenue also saw a respectable increase of approximately 6.13%, rising from RM20.00 million to RM21.22 million.

Profitability: A Mixed Picture

While revenue climbed, profitability tells a more nuanced story, particularly when looking at the cumulative figures:

The current quarter’s PAT saw an increase of approximately 14.97%, primarily driven by higher sales from the plastic injection moulded parts segment. However, the year-to-date PAT experienced a notable decline:

This represents a decrease of approximately 23.93% year-to-date. The primary culprit for this reduction was a significant total loss on foreign exchange of approximately RM0.74 million during the current 9-month period, a stark contrast to the preceding year. Furthermore, compared to the immediate preceding quarter, PAT decreased by approximately 34.66%, from RM1.76 million to RM1.15 million. This was largely due to a total loss on foreign exchange of approximately RM0.31 million in the current quarter, compared to a total gain of approximately RM1.57 million in the previous quarter.

Earnings Per Share (EPS)

Basic EPS for the current quarter stood at 0.63 sen, up from 0.56 sen in the corresponding preceding quarter. However, the year-to-date basic EPS was 1.66 sen, a decrease from 2.23 sen in the previous year, mirroring the impact of the foreign exchange losses on the cumulative profit.

Diving Deeper: Segmental and Financial Health

Business Segment Contribution

Volcano Berhad’s revenue streams are primarily diversified across two key segments:

The plastic injection moulded parts segment played a crucial role in the current quarter’s profit increase, indicating strong performance and demand within this area. Geographically, the Group continues to serve a diverse customer base, with significant contributions from Thailand, Singapore, and Malaysia.

Balance Sheet Insights: Investments and Funding

The balance sheet reveals significant investments in the Group’s operational capacity:

The substantial increase in property, plant, and equipment (over RM26 million) suggests significant capital expenditure, likely aimed at expanding production capabilities or upgrading facilities. This expansion appears to be largely funded by an increase in non-current loans and borrowings, which surged by over RM26 million. Despite increased borrowings, the net assets per share also saw a slight increase, reflecting a growing equity base.

Cash Flow Dynamics

The cash flow statement highlights the funding of these investments:

A notable shift occurred in cash flow from operating activities, which turned negative year-to-date, primarily due to increases in inventories and receivables. This, coupled with significantly higher capital expenditure for property, plant, and equipment (almost doubling from the previous year), led to a substantial increase in net cash used in investing activities. To fund these expansions, the Group relied heavily on financing activities, with significant drawdowns of term loans and trust receipts.

Navigating the Headwinds: Risks and Future Prospects

Industry Outlook & Challenges

Volcano Berhad acknowledges that the sales demand for both its nameplates and plastic injection moulded parts segments is expected to face challenges. These challenges stem from broader global economic concerns, including the potential impact of reciprocal tariffs from the United States of America, persistent inflationary pressures, and a general softening of demand from the end-user industries that the company serves.

Management’s Strategic View

Despite these external pressures, the management maintains a cautious yet optimistic outlook. They are of the opinion that, barring any unforeseen circumstances such as significant disruptions to the supply chain, material fluctuations in foreign currency exchange rates (which have already impacted recent results), and a more severe economic slowdown, the Group’s financial results for the financial year ending 30 June 2025 will remain favourable. This suggests confidence in their operational resilience and strategic initiatives to mitigate these risks.

A Note on Dividends

During the current quarter under review, Volcano Berhad paid a single-tier interim dividend of 0.32 sen per ordinary share, amounting to approximately RM0.58 million. This dividend, in respect of the financial year ending 30 June 2025, was disbursed on 21 March 2025, signaling the company’s commitment to returning value to its shareholders.