D’NONCE Navigates Challenging Waters: A Deep Dive into Their Latest Quarterly Performance

D’NONCE Technology Bhd. has just released its interim financial results for the fourth quarter ended 31 March 2025, wrapping up its financial year. The report paints a picture of a company facing a complex landscape, showcasing revenue growth but also grappling with significant losses. While the company saw an increase in its top-line performance for the full year, the latest quarter revealed a deeper dive into the red. Let’s break down the numbers and understand what’s shaping D’NONCE’s journey.

Core Financial Highlights: A Mixed Bag

D’NONCE’s latest report presents a dual narrative: a commendable increase in revenue for the full financial year, yet a notable widening of losses in the final quarter and cumulatively. This signals both operational momentum and underlying challenges.

Quarterly Performance (Q4 FY2025 vs Q4 FY2024)

For the fourth quarter, D’NONCE recorded a revenue of RM 49.0 million, an increase of 8.5% compared to RM 45.2 million in the same period last year. However, operating profit declined by 9% to RM 3.0 million. The quarter saw a significant widening of losses, with loss before taxation surging by 244% to RM (7.6) million, and loss attributable to ordinary equity holders of the parent increasing by 230% to RM (8.8) million. This translated to a basic loss per share of (1.02) sen, compared to (0.46) sen previously.

Full Financial Year Performance (FY2025 vs FY2024)

For the full financial year, D’NONCE’s revenue grew by 12% to RM 198.3 million from RM 176.4 million in the previous year. However, the operating profit decreased by 26% to RM 8.0 million. The full-year loss before taxation significantly deepened by 176% to RM (22.7) million, and the loss attributable to the parent company increased by 170% to RM (23.9) million. This resulted in a basic loss per share of (2.75) sen, compared to (1.95) sen for the previous year.

The report highlights that the increased losses are primarily due to substantial “Fair value adjustment on other investments” which saw a significant increase from RM 7.4 million in FY2024 to RM 15.0 million in FY2025. Additionally, “Provision for and written off of receivables” also rose sharply from RM 65 thousand to RM 2.9 million for the full year, impacting profitability.

Segmental Performance: A Closer Look

D’NONCE operates across several key customer segments, each contributing differently to the overall performance:

Electrical and Electronics (E&E)

This segment saw positive growth, with revenue increasing by 12.6% to RM 22.3 million in the current quarter compared to RM 19.8 million in the same period last year. This growth was mainly driven by the recovery of the E&E segment in D’NONCE’s Southern Malaysian subsidiary. However, the segment recorded a loss of RM 1.8 million for the current quarter, a significant decline from a RM 1.4 million gain in the same quarter last year. This downturn is primarily attributed to a RM 2.7 million provision for doubtful debts.

Healthcare

The healthcare segment’s revenue remained stable at RM 15.8 million, in line with the corresponding quarter last year. Nevertheless, segment results decreased by 35.7% to RM 0.9 million from RM 1.4 million. The reduction in profit is mainly due to lower margins experienced by one of the Thailand subsidiaries.

Other Industries

This segment, which includes automotive, furniture, food and beverage, and other manufacturing industries, demonstrated strong growth. Revenue increased by 13.5% to RM 10.9 million from RM 9.6 million in the same quarter last year. This growth is a result of new strategies implemented during the year. Furthermore, the segment turned profitable with a gain of RM 0.8 million, a significant improvement from a RM 0.2 million loss previously. This improvement is largely due to increased segment revenue and decreased production overhead costs for another Thailand subsidiary.

Quarter-on-Quarter Comparison (Q4 FY2025 vs Q3 FY2025)

Compared to the preceding quarter (Q3 FY2025), overall revenue for D’NONCE decreased by 15.1% to RM 49.0 million from RM 57.7 million. The loss attributable to ordinary equity holders also widened to RM 8.8 million from RM 6.5 million in the previous quarter.

• Healthcare: Revenue slightly decreased, and segment results fell due to lower margins in Thailand.
• E&E: Revenue increased by 15.5% to RM 22.3 million, but the segment swung from a RM 1.0 million gain to a RM 1.8 million loss, again due to the provision for doubtful debts.
• Other Industries: Revenue decreased as the Group focused on reducing lower-margin products, but profitability significantly improved to RM 0.8 million due to a higher-margin product mix.
• Others: This segment, which recorded RM 9.5 million in revenue from inventory property sale in the preceding quarter, had no revenue in the current quarter, impacting overall top-line.

Financial Health and Cash Flow

A look at the balance sheet shows some shifts in D’NONCE’s financial position:

Total assets for D’NONCE decreased slightly to RM 326.4 million from RM 334.2 million, while total equity also saw a reduction to RM 214.9 million from RM 238.5 million. Correspondingly, total liabilities increased to RM 111.5 million from RM 95.7 million. Net assets per share also declined from RM 0.27 to RM 0.25.

Cash and bank balances notably decreased to RM 24.8 million from RM 42.5 million. The Group’s total borrowings increased to RM 66.8 million from RM 54.3 million, indicating a higher leverage. Despite this, the company reported positive net cash generated from operating activities, which increased to RM 17.3 million for the full year from RM 13.6 million previously. However, net cash used in investing activities remained substantial at RM 46.7 million, largely due to significant purchases of property, plant, and equipment (RM 33.2 million). Net cash generated from financing activities saw a sharp drop to RM 12.8 million from RM 50.9 million, partly reflecting the completion of a rights issue in the prior year which significantly boosted cash then.

Risks and Prospects: Navigating Uncertainty

D’NONCE acknowledges the prevailing instability in the global economic environment. Key concerns highlighted include geopolitical risks, the potential for disruptive policy changes (such as unfavorable trade policies), financial market vulnerability, and foreign currency risks. The company notes the difficulty in predicting the full extent and duration of these impacts on the global economy.

Despite these headwinds, D’NONCE maintains a cautiously optimistic stance on its long-term business prospects. The Group is committed to actively pursuing various business strategies aimed at increasing revenue and implementing stringent cost control measures to mitigate the challenging environment.

From an objective standpoint, D’NONCE is in a period of strategic adjustment. The revenue growth, especially in certain segments, suggests that their core business activities are still generating income. However, the substantial losses, particularly those stemming from non-operational items like fair value adjustments and specific provisions, warrant close attention. The focus on cost control and new strategies in the ‘Other Industries’ segment could be positive indicators of management’s efforts to enhance profitability amidst a