Key Financial Highlights: Reduced Losses Amidst Revenue Dip

PRB’s third quarter saw a revenue decrease, but the significant reduction in losses is a noteworthy achievement. This indicates effective cost management and operational efficiency improvements, even as the company navigates a tougher top-line environment.

Third Quarter Performance (Ended 31 March 2025 vs. 31 March 2024)

In the third quarter, PRB’s revenue saw a 5.4% decline to RM9.187 million from RM9.715 million in the same period last year. However, the silver lining is a substantial improvement in profitability, with the loss before tax narrowing by 35.8% to RM0.617 million from RM0.961 million. This positive shift is also reflected in the basic loss per share, which improved to (1.27) sen from (1.98) sen.

Year-to-Date Performance (Ended 31 March 2025 vs. 31 March 2024)

For the nine-month period, revenue decreased by 5.7% to RM29.168 million. Despite this, the year-to-date loss before tax significantly reduced by 28.4% to RM1.251 million, compared to RM1.748 million in the previous corresponding period. This sustained reduction in losses over the nine months underscores the Group’s ongoing efforts to streamline operations and manage costs effectively.

Diving Deeper: Segmental Performance Breakdown

PRB operates primarily in two segments: Trading of IT related products and Food & Beverage. Their individual performances paint a clearer picture of the Group’s overall results.

IT Related Products Segment

The IT division faced headwinds, with its revenue for the quarter declining by 6.0% to RM6.279 million, primarily due to lower distributor sales. However, the segment’s loss before tax improved significantly by 51.3%, narrowing to RM0.399 million. This improvement in the bottom line, despite lower sales, was attributed to lower operational costs. For the year-to-date, the IT segment’s revenue was down 10.0% to RM19.716 million, but its loss before tax reduced by 33.2% to RM1.269 million, consistent with the quarterly trend of cost optimization.

Food & Beverage (F&B) Division

The F&B division experienced a mixed bag of results. Quarterly revenue saw a 4.3% decrease to RM2.908 million, and its loss before tax widened by 54.6% to RM0.218 million. The report attributes this to the termination of two PappaRich franchisees in Bandar Tun Hussein Onn and Puchong Kinrara. This highlights the impact of network changes on the immediate performance.

However, looking at the year-to-date figures, the F&B division’s revenue actually saw a slight increase of 4.8% to RM9.452 million. This positive revenue trend was driven by aggressive promotional activities. Despite the revenue growth, the segment’s profit before tax decreased significantly by 88.2% to RM0.018 million, primarily due to higher promotional costs and the aforementioned franchisee terminations. This suggests that while PRB is pushing for sales, it’s coming at a higher cost in the current environment.

Financial Health and Cash Flow

As of 31 March 2025, PRB’s total assets stood at RM19.829 million, a decrease from RM21.364 million as of 30 June 2024. Net assets per share also saw a slight dip to RM0.29 from RM0.32. Despite these changes, the company managed to significantly increase its cash and bank balances to RM2.820 million from RM1.780 million over the nine-month period. This positive cash position was bolstered by a robust net cash inflow from operating activities, which reached RM2.453 million for the year-to-date, demonstrating healthy operational cash generation.

Outlook and Strategic Direction: Navigating the Future

PRB acknowledges the challenging business environment and has outlined clear strategies to navigate it.

IT Division: Prudence and Vigilance

The outlook for the IT division remains tough, characterized by continuous pressure from new product offerings, thin profit margins, and intense competition, especially from online sales channels. To counter these challenges, PRB’s strategy for its IT segment focuses on prudent inventory procurement and vigilant management of operational costs. This approach aims to maintain competitiveness in a highly saturated market.

F&B Division: Promising Growth Ahead

In contrast, the F&B division, particularly under the “PappaRich” brand, shows a promising and encouraging outlook. PRB reported positive responses and feedback from potential franchisees during the recent “International Franchise Exhibition and Convention 2025” event. This has instilled confidence in the Group, which aims to add five new PappaRich franchisees by the end of 2025. This expansion plan signals a strong growth trajectory for the F&B segment, potentially diversifying the Group’s revenue streams and reducing reliance on the challenging IT sector.

Overall Group Strategy

Across both divisions, PRB’s overarching strategy includes:

• Implementing dynamic pricing mechanisms to gain a competitive edge.
• Effective cost management to improve overall profitability.
• Developing and tapping into niche markets.
• Continuous development and launching of new product offerings.
• Aggressive use of digital platforms and social media for promotion.

These strategies are crucial for the Group to adapt and thrive in the current economic climate.