Unpacking the Numbers: A Deep Dive into Performance

UMS Holdings Berhad’s latest financial results show a mixed picture, primarily impacted by a softer market demand and the absence of significant one-off gains seen in the previous year. Understanding these figures requires looking at both year-on-year comparisons and sequential quarter performance.

Year-on-Year Performance (Q2 FY2025 vs Q2 FY2024)

The second quarter of Financial Year 2025 saw a notable decline in key financial metrics when compared to the same period last year:

Revenue decreased by RM2.55 million, or 13.71%, primarily due to a general decrease in market demand. This translated into a significant swing from profit to loss, with Profit Before Tax (PBT) declining by RM2.46 million, or 304.70%, from a profit of RM0.81 million to a loss of RM1.65 million. Similarly, Profit After Tax (PAT) saw a substantial drop of RM1.90 million, resulting in a loss of RM1.42 million compared to a profit of RM0.48 million in the previous year’s corresponding quarter.

Cumulative Six-Month Performance (6M FY2025 vs 6M FY2024)

Looking at the first six months of the financial year, the trend of reduced performance is also evident:

Revenue for the cumulative six months decreased by RM3.40 million (8.78%). The PBT experienced a sharper decline of RM4.02 million (60.73%), mainly attributable to a significant gain of RM3.62 million from the disposal of an Associated Company in the previous corresponding period (6M FY2024), coupled with the overall decrease in revenue in the current period.

Sequential Quarter Performance (Q2 FY2025 vs Q1 FY2025)

Comparing the current quarter with the immediate preceding quarter (Q1 FY2025, ended 31 December 2024) reveals further insights into recent trends:

Revenue declined by RM3.21 million (16.67%) from the previous quarter. The PBT swung from a profit of RM4.25 million to a loss of RM1.65 million, a decrease of RM5.91 million (138.88%). This significant change was primarily due to a RM1.30 million gain from the disposal of a building in the immediate preceding quarter, along with an overall decrease in revenue and an increase in operating costs, mainly manpower related.

Segmental Revenue Analysis

The group underwent a significant restructuring of its business operations effective 1 October 2024, where UMS (JB) Sdn Bhd, UMS (Kuantan) Sdn Bhd, and UMS (Sarawak) Sdn Bhd transferred their operations to UMS Corporation Sdn Bhd. This restructuring has had a direct impact on the segmental revenue figures:

Cumulative 6-Month Revenue by Segment (RM’000)

The significant increases in the Central region and 100% decreases in Southern, Eastern, and Sarawak regions are a direct result of this internal restructuring, as their business operations are now consolidated under the Central region’s reporting. The decrease in Singapore’s revenue is mainly attributed to a project sale (Vacono) of RM1.08 million in the previous corresponding period that did not recur in the current period.

Financial Health and Cash Flow Dynamics

Beyond the income statement, a look at the balance sheet and cash flow provides a deeper understanding of UMS Holdings’ financial standing.

Balance Sheet Snapshot (As at 31 March 2025)

The company maintains a solid financial position, with total assets at RM169.74 million and total equity at RM163.90 million. A key highlight is the group’s continued absence of borrowings, signifying a robust and debt-free financial structure. Net assets per share stood at RM4.03, slightly down from RM4.07 as at 30 September 2024.

Cash and cash equivalents, including fixed deposits, totalled RM44.20 million as at 31 March 2025, compared to RM49.57 million at the beginning of the six-month period. While there was a slight increase in inventories and trade receivables, trade and other payables saw a decrease, indicating some management of working capital.

Cash Flow Performance

For the six-month period ended 31 March 2025, UMS Holdings experienced a net cash outflow from operating activities of RM3.65 million. This contrasts with a net inflow of RM5.54 million in the previous corresponding period, reflecting the challenging operational environment and lower profitability. Investing activities generated a net cash inflow of RM1.90 million, primarily due to proceeds from the disposal of property, plant, and equipment. However, this was lower than the RM4.99 million inflow in the previous period which included a substantial gain from the disposal of an Associated Company.

Financing activities recorded a net cash outflow of RM4.07 million, mainly due to dividend payments during the period. Overall, the group saw a net decrease of RM5.81 million in cash and cash equivalents, bringing the total to RM44.20 million.

Outlook and Strategic Direction

UMS Holdings Berhad acknowledges the challenging global and domestic economic landscape while remaining cautiously optimistic about its future performance.

Global and Malaysian Economic Environment

The International Monetary Fund (IMF) has revised down its global growth projections, citing increased trade tensions and policy uncertainties. The US economy is expected to slow, though China and India are projected to maintain decent growth rates. Domestically, the Malaysian economy expanded by 4.4% in Q1 2025, supported by steady domestic demand, a positive labour market, and investment activities. However, export growth has slowed, and the overall Malaysian economic growth for 2025 is anticipated to be slightly lower than earlier forecasts due to escalating trade tensions.

Company Prospects and Initiatives

Despite these headwinds, UMS Holdings is cautiously optimistic about maintaining a profitable outcome in the upcoming quarters. The group’s strategic restructuring, which consolidated various regional operations under UMS Corporation Sdn Bhd, is a key move to streamline operations and potentially improve efficiency. Additionally, the company’s shareholders approved a proposal on 28 February 2025 to undertake a share buyback of up to 10% of its issued and paid-up share capital, signaling confidence in the company’s intrinsic value and a commitment to shareholder returns.

It’s worth noting that while dividends were paid during the period as reflected in the cash flow, no new dividends were proposed for this particular quarter or period under review.