Hello, fellow investors and market watchers! Today, we’re diving into the latest financial report from ABM FUJIYA BERHAD for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s performance, revealing a significant turnaround in operational profitability despite a challenging revenue landscape. While the company is still navigating through a period of net loss, there are promising signs of progress, particularly with their strategic investments in new manufacturing capabilities.
Let’s break down the key figures and what they mean for ABM FUJIYA’s journey ahead.
Q1 2025 Performance: A Step Towards Operational Recovery
ABM FUJIYA Berhad has demonstrated a notable improvement in its financial performance for the first quarter of 2025 compared to the same period last year. While revenue saw a dip, the company successfully transitioned from an operational loss to a profit, showcasing enhanced efficiency and cost management. However, increased finance costs remain a significant hurdle.
Key Financial Highlights (Q1 2025 vs Q1 2024)
Revenue
Q1 2025: RM37.70 million
Compared to Q1 2024
RM47.01 million (-19.8% decrease)
Gross Profit/(Loss)
Q1 2025: RM4.34 million (Profit)
Compared to Q1 2024
RM(0.31) million (Loss) – Significant turnaround!
Profit/(Loss) from Operation
Q1 2025: RM1.61 million (Profit)
Compared to Q1 2024
RM(3.25) million (Loss) – Impressive operational recovery.
Loss Before Tax (LBT)
Q1 2025: RM(2.68) million
Compared to Q1 2024
RM(6.52) million – A substantial 58.9% reduction in loss.
Net Loss Attributable to Equity Holders
Q1 2025: RM(1.75) million
Compared to Q1 2024
RM(7.24) million – A significant 75.8% reduction in loss for shareholders.
Basic Loss Per Share
Q1 2025: (0.97) sen
Compared to Q1 2024
(4.02) sen – Showing less loss per share.
The reduction in loss before tax by nearly 59% is a strong indicator of the company’s efforts to streamline operations. This improvement is primarily driven by a remarkable turnaround in gross profit, from a loss of RM0.31 million in Q1 2024 to a profit of RM4.34 million in Q1 2025. This suggests better efficiency in production and cost of sales.
Deep Dive into Profit and Loss
| Metric (RM’000) | Q1 2025 (Unaudited) | Q1 2024 (Unaudited) | Change (%) |
|---|---|---|---|
| Revenue | 37,700 | 47,012 | -19.8% |
| Cost of Sales | (33,364) | (47,320) | -29.5% |
| Gross Profit/(Loss) | 4,336 | (308) | Turned Profitable |
| Other Income | 480 | 702 | -31.6% |
| Expenses | (3,205) | (3,639) | -12.0% |
| Profit/(Loss) from Operation | 1,611 | (3,245) | Turned Profitable |
| Finance Costs | (4,292) | (3,277) | +30.9% |
| Profit/(Loss) Before Taxation | (2,681) | (6,522) | -58.9% |
| Taxation | (653) | (713) | -8.4% |
| Net Loss for the Period | (3,334) | (7,235) | -53.9% |
While revenue declined, the significant reduction in the cost of sales (nearly 30%) allowed the company to achieve a positive gross profit. This efficiency gain carried through to the operational level, where the company recorded a profit from operations of RM1.61 million, a stark contrast to the RM3.25 million loss in the prior year. This suggests that the new battery manufacturing plant is starting to yield benefits in terms of production efficiency and economies of scale, as mentioned in the report.
However, the elephant in the room remains the finance costs, which surged by over 30% to RM4.29 million. This increase is attributed to the financing of the new battery manufacturing plant, significantly impacting the bottom line and pulling the company into a pre-tax loss despite operational improvements.
Segmental Performance: Manufacturing Leads the Way
The segment breakdown clearly illustrates the operational improvements. The **Manufacturing** segment turned a profit of RM704k in Q1 2025, a substantial recovery from a loss of RM3.47 million in Q1 2024. This positive shift is likely a direct result of the new plant’s improved efficiency and staff expertise. Although the manufacturing revenue from external customers decreased, the ability to turn a profit indicates better cost control within this segment.
The **Marketing** segment also performed well, increasing its segment profit to RM955k from RM252k in Q1 2024, with a slight increase in revenue from external customers. This shows consistent performance from the sales and distribution arm.
Financial Health: A Look at the Balance Sheet
As of 31 March 2025, ABM FUJIYA’s financial position shows some key movements:
Total Assets
31 Mar 2025: RM527.48 million
Compared to 31 Dec 2024
RM511.09 million (+3.2% increase)
Total Liabilities
31 Mar 2025: RM349.82 million
Compared to 31 Dec 2024
RM330.10 million (+6.0% increase)
Total Borrowings
31 Mar 2025: RM311.63 million
Compared to 31 Dec 2024
RM296.27 million (+5.2% increase)
The increase in total assets is primarily due to an increase in inventories and receivables, possibly indicating preparation for future sales or a slower collection cycle. The rise in total liabilities, particularly loans and borrowings, directly reflects the ongoing financing needs for the new manufacturing plant. This higher debt level is the root cause of the increased finance costs we observed in the profit and loss statement.
Cash Flow: Managing Liquidity Amidst Expansion
The cash flow statement reveals a mixed picture. While net cash used in operating activities increased to RM8.63 million (from RM6.97 million in Q1 2024), indicating that operations are still consuming cash, the company significantly reduced its cash outflow from investing activities, down to RM2.60 million from RM5.72 million in Q1 2024. This suggests a moderation in capital expenditure after the initial heavy investment in the new plant.
Crucially, net cash generated from financing activities saw a substantial jump to RM11.59 million from RM2.45 million. This was mainly driven by higher drawdowns from loans and borrowings, which helped the company achieve a positive net increase in cash and cash equivalents of RM366k, a welcome change from the RM10.23 million decrease in the same period last year.
Risks and Prospects: Embracing the EV Shift
The Malaysian economy is growing steadily, with a 4.4% expansion in Q1 2025, supported by domestic demand and positive labor market conditions. This provides a stable backdrop for ABM FUJIYA’s operations.
The company’s prospects are heavily tied to its new battery manufacturing plant. With four production lines already completed and a fifth line expected by year-end, ABM FUJIYA is poised to boost its output for both local and international markets. This expansion is critical for leveraging the improved operational efficiency and ultimately, driving revenue growth.
A significant strategic move is the commencement of production for EFB (Enhanced Flooded Battery) Batteries. EFB batteries are a key component for Electric Vehicles (EVs) alongside lithium batteries. This move positions ABM FUJIYA to embrace the global shift towards EV adoption, allowing them to stay competitive and tap into a growing market. This foresight in adapting to market trends is commendable and could be a significant growth driver in the long term.
However, the elevated finance costs due to borrowings for the new plant remain a notable risk. While operational efficiency is improving, the burden of interest payments will continue to weigh on profitability until revenue scales up sufficiently to offset these costs or debt levels are reduced.
Summary and Investment Considerations
ABM FUJIYA Berhad’s Q1 2025 report presents a narrative of operational recovery and strategic positioning. The company has made significant strides in improving its gross profit and turning around its operational performance, thanks to the efficiencies gained from its new battery manufacturing plant. This is a positive sign that the substantial investments are beginning to bear fruit on the production side.
However, the increased finance costs, a direct consequence of the new plant’s funding, continue to drag the company into a net loss position. The path to sustained profitability will depend on how effectively ABM FUJIYA can scale up its sales and leverage the new production capacity to outpace these financing expenses.
Key points to consider moving forward:
- **Operational Efficiency:** The manufacturing segment’s return to profitability is a strong indicator of improved internal processes and cost control.
- **Strategic Expansion:** The completion of additional production lines and the foray into EFB batteries for the EV market are crucial long-term growth drivers.
- **Debt Management:** The high finance costs present a challenge. Investors should monitor the company’s ability to generate sufficient cash flow to manage its debt obligations and eventually reduce them.
- **Market Penetration:** The success of the new battery plant and EFB production will heavily rely on the company’s ability to expand its market share both locally and internationally.
Overall, ABM FUJIYA Berhad is in a transitional phase, demonstrating promising operational improvements while managing the financial implications of its expansion. The strategic pivot towards EFB batteries for the EV market is a forward-looking move that could unlock significant value in the future.
What are your thoughts on ABM FUJIYA’s Q1 2025 performance? Do you think the company can maintain this operational momentum and effectively manage its finance costs in the coming quarters? Share your insights in the comments below!
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