Milux Corporation Berhad: Navigating Challenges with Strategic Shifts in Q1 2025
Greetings, fellow investors and market watchers! Today, we’re diving deep into the latest financial report from Milux Corporation Berhad for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s performance, highlighting both the hurdles faced in a challenging market and the strategic maneuvers being deployed to steer towards a brighter future.
While the quarter saw a notable dip in revenue compared to the previous year, Milux demonstrated resilience in its gross profit margin and significantly narrowed its losses quarter-on-quarter. The company is not standing still; it’s actively expanding its product portfolio and embracing digitalization to combat external pressures. Let’s break down the numbers and understand what’s truly happening behind the scenes.
Core Financial Highlights: A Mixed Bag of Performance
Milux’s Q1 2025 results present a nuanced picture. While year-on-year comparisons show a contraction, the quarter-on-quarter performance reveals encouraging signs of recovery and efficiency improvements.
Revenue Performance: A Decline Driven by OEM
The first quarter of 2025 saw Milux’s revenue decline, primarily impacted by its OEM trading operations. The company reported a revenue of:
Q1 2025
RM8.745 million
Q1 2024
RM12.581 million
This represents a significant 30.5% decrease year-on-year. The OEM trading operation was the primary culprit, experiencing a substantial 90.3% drop due to the absence of project sales, while the traditional trading operation also saw an 18.1% decline. However, on a quarter-on-quarter basis (compared to Q4 2024), revenue only fell by 6.3%, indicating some stabilization.
Gross Profit & Margin: Efficiency Gains Shine Through
Despite the lower revenue, Milux managed to improve its gross profit margin, a testament to better cost management and inventory strategies.
Gross Profit (Q1 2025)
RM2.583 million
Gross Profit (Q1 2024)
RM2.997 million
While gross profit decreased by 13.8% year-on-year due to lower sales, the gross profit margin (GPM) improved by 5.7 percentage points to 29.5% from 23.8% in Q1 2024. This improvement was partly attributed to the write-back of slow-moving inventories that were previously impaired and sold during the quarter, contributing 3.8 percentage points to the GPM. Notably, compared to Q4 2024, gross profit surged by 70.0%, primarily due to the write-back of slow-moving stocks impaired in the previous quarter.
Operating Expenses: A Closer Look
- Administrative Expenses (AE): Marginally increased by 1.52% to RM2.399 million (Q1 2024: RM2.363 million). This was due to expenses for seeking shareholder approval for related party transactions, higher service tax (now 8% from March 1, 2024), and increased staff salaries from two additional senior management personnel.
- Other Operating Expenses (OE): Saw a significant jump of 418.5% to RM0.28 million (Q1 2024: RM0.054 million). This was mainly due to impairment of trade receivables and higher realized foreign exchange losses.
- Selling & Distribution Expenses (S&D): Decreased by 26.0% to RM0.711 million (Q1 2024: RM0.961 million), aligning with the lower revenue. However, as a percentage of revenue, S&D expenses were slightly higher at 8.1% (Q1 2024: 7.6%).
Finance Costs: A Significant Reduction
Milux achieved a substantial reduction in its finance costs:
Finance Costs (Q1 2025)
RM0.018 million
Finance Costs (Q1 2024)
RM0.099 million
This impressive 81.8% decrease was largely due to the non-utilization of bankers’ acceptance facilities, termination of a property lease liability, and a natural decline in lease interest over time.
Bottom Line: Higher Loss Year-on-Year, but Improved Quarter-on-Quarter
The combined effect of lower revenue and increased operating expenses led to a higher loss before taxation (LBT) year-on-year, but the quarter-on-quarter trend shows improvement.
Loss Before Taxation (Q1 2025)
RM(0.688) million
Loss Before Taxation (Q1 2024)
RM(0.308) million
LBT for Q1 2025 increased by 123.4% year-on-year, primarily due to the revenue decline impacting gross profit while operating expenses remained relatively stable. However, compared to Q4 2024, LBT decreased significantly by 56.9% from RM(1.595) million, largely due to the write-back of slow-moving inventories in Q1 2025 versus write-downs in Q4 2024.
Similarly, loss after taxation (LAT) for Q1 2025 was RM(0.703) million, compared to RM(0.323) million in Q1 2024, an increase of 117.6%. Basic loss per share stood at (0.30) sen for Q1 2025, compared to (0.14) sen in Q1 2024.
Financial Position: Liquidity and Working Capital
As of 31 March 2025, Milux’s total assets stood at RM44.681 million, down from RM46.824 million at 31 December 2024. Key movements include:
- Inventories: Increased to RM18.570 million from RM11.262 million, suggesting potentially higher stock levels.
- Fixed Deposits with Licensed Banks: Decreased significantly to RM3.434 million from RM12.498 million, impacting overall cash and cash equivalents.
- Cash and Bank Balances: Increased to RM9.498 million from RM6.808 million.
Net cash used in operating activities was RM(6.140) million in Q1 2025, a stark contrast to RM0.490 million generated in Q1 2024, primarily driven by the increase in inventories. Overall, net decrease in cash and cash equivalents was RM(6.374) million for the quarter.
Segmental Performance: Home Appliances Bears the Brunt
The “Home appliances” segment reported a loss for the period of RM(0.395) million (Q1 2024: RM(0.309) million loss), reflecting the overall revenue decline. The “Others” segment also posted a loss of RM(0.291) million, a reversal from a profit of RM0.043 million in Q1 2024. This indicates broad challenges across the group’s operations.
Risks and Prospects: Adapting to a Dynamic Environment
Milux is operating in an increasingly complex global landscape. The company acknowledges that growth momentum is expected to soften due to external factors, particularly the potential impact of the United States’ reciprocal tariff plan. This highlights the sensitivity of its business to international trade policies and consumer confidence.
However, Milux is not passively awaiting market shifts. The management has outlined clear strategies to navigate these challenges and reignite growth:
- Product Range Expansion: A key initiative is to increase its product range to include “white goods” such as refrigerators and washing machines. This diversification aims to capture new market segments and reduce reliance on its current home appliance offerings.
- Customer Base Growth via Online Channels: Leveraging online platforms is crucial for expanding reach and growing its customer base in the digital age. This aligns with evolving consumer purchasing habits.
- Digitalization of Back-Room Operations: The company is strategically leveraging its new major shareholder’s expertise in digitalization. This move aims to transform and optimize business processes and workflows, enhancing efficiency and driving sustainable growth.
By focusing on these strategic pillars, Milux hopes to increase revenue and return to profitability in the foreseeable future, demonstrating a proactive approach to a challenging scenario.
Summary and
Milux Corporation Berhad’s Q1 2025 report reflects a challenging period marked by revenue contraction, particularly in its OEM segment. While the company reported a higher loss year-on-year, the significant improvement in gross profit margin and reduction in losses on a quarter-on-quarter basis suggest that internal efficiency measures are starting to yield results. The substantial reduction in finance costs is also a positive development. Management’s forward-looking strategies, including product diversification into white goods, leveraging online channels, and digitalization, are critical steps towards adapting to the dynamic market and aiming for a return to profitability. The external environment remains a key watch point, with global trade policies posing potential headwinds.
Key points to consider from this report include:
- Revenue Decline: The significant year-on-year drop, especially in OEM, highlights a need for successful execution of new sales strategies.
- Improved Gross Profit Margin: Despite lower revenue, the higher GPM indicates better cost control and inventory management, a positive sign of operational efficiency.
- Increased Operating Expenses: The rise in administrative and other operating expenses, partly due to new hires and impairment, will require careful monitoring.
- Strategic Initiatives: The focus on expanding product lines, online sales, and digitalization are crucial for future growth and competitive positioning.
- Cash Flow from Operations: The negative cash flow from operations due to inventory build-up is a point to observe in upcoming quarters.
From a professional standpoint, Milux’s Q1 2025 results underscore the ongoing efforts to transform and adapt within a tough market. The company is actively addressing its challenges through strategic shifts, which is a positive signal for long-term sustainability. The question remains: can these strategic initiatives gain enough traction to overcome the prevailing market headwinds and propel Milux back into consistent profitability?
What are your thoughts on Milux’s latest performance and its strategic direction? Do you believe their focus on new product categories and digitalization will be enough to turn the tide? Share your insights in the comments below!
