In the dynamic world of business, quarterly reports serve as crucial snapshots of a company’s health and strategic direction. Today, we’re dissecting the latest interim financial report from COMPUTER FORMS (MALAYSIA) BERHAD (CFM) for its second quarter ended 31 March 2025. While the headline figures reveal a challenging period with continued revenue contraction and losses, a closer look uncovers critical strategic shifts and some underlying improvements that warrant attention. Join us as we unpack the numbers and explore CFM’s path forward.

Core Data Highlights: A Mixed Bag of Results

CFM’s second quarter saw a significant dip in overall financial performance when compared to the same period last year and the immediate preceding quarter. Let’s break down the key figures:

Overall Performance: Quarter-on-Quarter Comparison

For the quarter ended 31 March 2025, CFM reported a revenue of RM 2.44 million, a substantial 65.39% decrease from RM 7.04 million in the corresponding quarter last year. This decline trickled down to the bottom line, with the Group recording a loss before tax of RM 1.25 million, an 8.76% increase in loss compared to RM 1.15 million in the same quarter last year.

However, there’s a subtle positive note: the loss attributable to owners of the parent actually saw a 3.93% reduction, moving from RM 1.17 million to RM 1.13 million. Similarly, the loss per share improved from (0.44) sen to (0.37) sen, indicating a slightly better outcome for shareholders despite the overall losses.

Performance Against Immediate Preceding Quarter

Compared to the immediate preceding quarter (Q1 FY2025, ended 31 December 2024), revenue declined by 17.98%. The loss before tax widened significantly by 109.35%, primarily due to lower sales performance coupled with higher procurement costs.

Segmental Performance: Understanding the Drivers

The report provides a granular view of each business segment’s contribution:

• Business Forms and Data Print Services: This segment, historically a core revenue driver, saw its revenue decrease by 21.91% to RM 2.34 million. This was mainly due to lower demand for security printing products, data print services, business forms, and envelopes. The segment also recorded a higher loss before tax of RM 1.34 million, impacted by increased raw material utilization, staff costs, utilities, and professional fees.
• Commercial Printing: Revenue for this segment plummeted by 83.89% to RM 0.03 million, attributed to reduced service orders for cigarette papers. However, the segment’s loss before tax significantly narrowed to RM 0.09 million, a positive swing of RM 0.47 million, largely due to the absence of a non-recurring loss on investment in quoted shares recorded in the prior year.
• Flexible Packaging: This segment faced the most severe revenue contraction, declining by 98.41% to RM 0.06 million, primarily due to an interruption of business operations. Despite this, the segment remarkably recorded a profit before tax of RM 0.13 million, a substantial improvement of RM 0.67 million from a loss in the corresponding quarter. This turnaround was mainly driven by insurance claims recognized as other income.

Financial Health: A Look at the Balance Sheet

While the income statement showed challenges, CFM’s balance sheet reveals some strengthening in its financial position. Total liabilities saw a significant reduction from RM 10.11 million as at 30 September 2024 to RM 4.02 million as at 31 March 2025. This was largely driven by a notable decrease in short-term borrowings, which fell from RM 4.64 million to RM 1.30 million. Total equity increased to RM 122.88 million from RM 120.14 million, primarily due to the exercise of options under the Share Issuance Scheme (SIS).

Cash Flow: A Positive Turnaround

Perhaps one of the most encouraging aspects of this report is the cash flow statement. For the cumulative six months ended 31 March 2025, CFM reported a net increase in cash and cash equivalents of RM 1.99 million. This marks a significant turnaround from a net decrease of RM 0.16 million in the previous 12 months. The Group moved from a net overdraft position to having positive cash and bank balances, largely supported by net cash inflows from financing activities (RM 2.97 million) and improved net cash outflows from operating activities (RM 3.90 million outflow compared to RM 6.28 million outflow previously). This improved liquidity position provides some breathing room for the company.

Risks and Prospects: Charting a Course for Stability

CFM acknowledges the challenging market environment, shaped by technological advancements, evolving consumer preferences, and increasing sustainability demands. The management expects performance in the financial year 2025 to stabilize, with a focus on optimizing processes and strengthening the company’s position for sustainable growth. To address these challenges and seize opportunities, CFM has implemented several proactive strategies:

1. Action-Oriented Approach: Continuously monitoring industry trends and technological advancements in the printing sector to refine business plans and maintain a competitive edge.
2. Proactive and Customer-Focused Approach: Prioritizing outstanding customer service, timely responses, dependable delivery, and consistent quality, alongside actively soliciting feedback for continuous improvement.
3. Value-Added Services: Expanding offerings beyond traditional printing to include complementary services, aiming to strengthen customer loyalty, differentiate the brand, and open new revenue streams.
4. Embrace Digitalization: Investing in high-quality digital printers and workflow automation software to streamline operations, reduce costs, and deliver faster turnaround times.
5. Relocation and Machinery Upgrades: Preparing to relocate operational facilities and investing in new, modern equipment to enhance efficiency, minimize downtime, and strengthen market competitiveness, especially given that some current machinery is over 20 years old and inefficient.