Navigating the currents of the Malaysian market, Green Ocean Corporation Berhad (GOCB) has just released its unaudited interim financial statements for the period ended 31 March 2025. This report offers a glimpse into the company’s ongoing efforts to steer its business amidst a dynamic landscape. While the latest quarter shows promising revenue growth in its core Food & Beverages (F&B) segment, the company continues to grapple with significant losses, primarily driven by non-operational factors.
Join us as we dive deep into the numbers, dissecting GOCB’s performance, understanding the strategic shifts, and peering into what the future might hold for this intriguing Malaysian entity.
Financial Performance Highlights: A Mixed Bag
GOCB’s latest quarterly results present a nuanced picture. On one hand, the company achieved a commendable increase in revenue, signaling strength in its F&B operations. On the other hand, the bottom line was impacted by substantial provisions and fair value adjustments.
Revenue Growth in F&B
For the three months ended 31 March 2025, Green Ocean Corporation Berhad reported a significant uplift in revenue. The company’s focus on its F&B segment, encompassing the distribution of liquor and frozen processed food, appears to be yielding positive results.
Current Quarter (31 March 2025)
Revenue: RM2,340,000
Corresponding Quarter Last Year (31 March 2024)
Revenue: RM1,561,000
This represents a robust 49.9% increase in revenue compared to the same period last year, demonstrating a positive sales trend in their F&B business.
Persistent Losses Driven by Specific Factors
Despite the strong revenue growth, the company recorded an increase in pre-tax and net losses for the quarter. This was largely attributable to specific non-operational items rather than core business performance.
Current Quarter (31 March 2025)
Loss Before Tax: RM(7,947,000)
Net Loss for the Period: RM(7,975,000)
Loss Per Share (Basic): (3.78) sen
Corresponding Quarter Last Year (31 March 2024)
Loss Before Tax: RM(7,207,000)
Net Loss for the Period: RM(7,207,000)
Loss Per Share (Basic): (3.41) sen
The increase in pre-tax loss by 10.3% was primarily driven by:
- A significant provision of RM5.25 million for impairment loss on trade and other receivables.
- Losses on fair value changes of quoted securities amounting to RM1.74 million.
- Depreciation expenses of RM0.88 million.
These factors underscore the challenges faced beyond day-to-day operations, particularly in managing financial assets and outstanding receivables.
Quarter-on-Quarter Performance: A Glimmer of Improvement
When comparing the current quarter (31 March 2025) to the immediate preceding quarter (31 December 2024), there’s a slight improvement in the loss figures, despite a dip in revenue.
Current Quarter (31 March 2025)
Revenue: RM2,340,000
Loss Before Tax: RM(7,947,000)
Net Loss for the Period: RM(7,975,000)
Immediate Preceding Quarter (31 December 2024)
Revenue: RM3,294,000
Loss Before Tax: RM(9,217,000)
Net Loss for the Period: RM(9,217,000)
While revenue decreased by 29.0% quarter-on-quarter, the pre-tax loss actually improved by 13.8%. This reduction in loss was mainly attributed to lower losses on fair value changes of quoted securities (RM7.57 million) and disposal of quoted securities (RM1.40 million) in the immediate preceding quarter. This indicates that while the company is still in a loss-making position, the magnitude of certain non-operating losses has decreased.
Financial Position: A Snapshot
As at 31 March 2025, the company’s total assets stood at RM102,423,000, a decrease from RM133,329,000 as at 30 September 2023. Total equity also saw a decline from RM113,710,000 to RM82,506,000. This reduction in equity is largely due to the recently completed capital reduction exercise of RM92.5 million, which also helped to reclassify accumulated losses into retained earnings, improving the optics of the balance sheet from a negative retained earnings to a positive balance of RM408,000.
Cash and bank balances decreased to RM4,190,000 from RM12,693,000 at the previous financial year end. This indicates a tightening of cash reserves, which is further reflected in the cash flow statement.
Cash Flow: Operations Provide, Investments Consume
For the 18 months ended 31 March 2025, Green Ocean Corporation Berhad generated positive cash flow from operating activities, amounting to RM3,513,000. This is a healthy sign, indicating that the core business is generating cash. However, significant cash was used in investing activities (RM10,138,000), primarily due to net investment in quoted securities and purchases of property, plant, and equipment. Financing activities also consumed cash (RM1,878,000) for finance costs, lease liabilities, and bank loan repayments. Overall, the company experienced a net decrease in cash and cash equivalents of RM8,503,000.
Risks and Prospects: Charting the Course Ahead
Green Ocean Corporation Berhad remains steadfast in its strategic focus on the Food & Beverages (F&B) business, which includes the distribution of frozen processed food products and the trading, import, and distribution of alcohol-related products. This specialization is a clear indication of the company’s intent to concentrate its efforts on sectors where it perceives the most potential for growth and stability.
The company acknowledges the “challenging business landscape” and is responding by emphasizing cost rationalization and operational efficiency across all its operations. This disciplined approach is crucial for improving profitability and ensuring business sustainability in a competitive environment.
A notable corporate development is the completion of a capital reduction exercise of RM92.5 million in February 2025. This move aims to enhance the company’s financial structure by offsetting accumulated losses. Furthermore, the company has extended the timeframe for the utilization of proceeds from its Rights Issue with Warrants, with RM20.228 million still unutilised and available until January 2026. These funds could be strategically deployed for future investments or working capital needs, potentially bolstering the F&B segment or exploring new avenues.
The disposal of Ace Edible Oil Industries Sdn. Bhd. (AEOI) in April 2024 also signifies a strategic streamlining of the Group’s composition, allowing for a sharper focus on its core F&B activities.
Summary and Outlook
Summary and
Green Ocean Corporation Berhad’s latest quarterly report paints a picture of a company in transition, strategically narrowing its focus while navigating financial headwinds. The significant revenue growth in its F&B segment is a positive indicator of its core business’s potential. However, the persistent net losses, driven by substantial impairment charges and fair value adjustments on financial assets, highlight ongoing challenges in its financial management and investment portfolio.
The company’s commitment to cost rationalization and operational efficiency, coupled with the strategic capital reduction and the remaining unutilised funds from the Rights Issue, suggests a proactive approach to improving its financial health and long-term viability. The divestment of non-core assets further reinforces its dedication to streamlining operations.
Key points to consider from this report include:
- Strong revenue growth in the F&B segment, indicating market acceptance and operational effectiveness in this core area.
- Substantial non-operating losses, particularly from impairment of receivables and fair value changes in quoted securities, impacting overall profitability.
- A strategic capital reduction exercise aimed at improving the balance sheet structure.
- Positive cash flow from operations, providing a foundation for future investments and working capital needs.
- Ongoing efforts in cost control and operational efficiency to enhance business sustainability in a challenging market.
Green Ocean Corporation Berhad is clearly on a journey of transformation, focusing on its strengths while addressing legacy financial issues. The management’s stated commitment to enhancing competitiveness and meeting customer needs, alongside a cautious approach to cost management, will be critical in determining its future success.
What are your thoughts on Green Ocean Corporation Berhad’s strategic direction? Do you believe their focus on F&B, combined with cost rationalization, will be enough to turn the tide towards sustainable profitability in the coming years? Share your insights in the comments below!
For more in-depth analysis of Malaysian companies, explore our other recent blog posts.
