Navigating the Headwinds: A Deep Dive into Scope Industries Berhad’s Latest Quarterly Performance
As Malaysian retail investors, understanding the pulse of our local companies is key to informed decisions. Today, we’re unpeeling the layers of Scope Industries Berhad’s latest quarterly report for the second quarter ended 31 March 2025. This report provides a fascinating glimpse into a company navigating a complex market landscape, revealing both challenges and strategic shifts. While the Group faced a significant revenue decline and swung into a loss year-to-date, a major corporate development is on the horizon that could redefine its future trajectory. Let’s break down the numbers and what they mean for Scope Industries.
Core Data Highlights: A Mixed Bag for the Group
The overall financial performance for Scope Industries Berhad for the nine months ended 31 March 2025 paints a challenging picture when compared to the same period last year. The Group experienced a substantial reduction in revenue and a swing from profit to loss.
Year-to-Date (31 Mar 2025)
Revenue: RM37.52 million
Operating Profit: RM(2.48) million (Loss)
Profit Before Taxation: RM(0.14) million (Loss)
Profit After Taxation: RM(0.46) million (Loss)
Compared to Year-to-Date (31 Mar 2024)
Revenue: RM126.45 million
Operating Profit: RM3.20 million (Profit)
Profit Before Taxation: RM3.99 million (Profit)
Profit After Taxation: RM3.32 million (Profit)
This represents a significant 70.3% decrease in revenue year-on-year for the nine-month period, leading to the Group recording a loss compared to a profit in the previous corresponding period. This overall decline was primarily driven by the performance of its key business segments.
Diving Deeper: Performance by Business Unit (Quarterly)
A closer look at each division’s performance for the quarter ended 31 March 2025, compared to the same quarter last year, reveals the specific areas of impact:
Manufacturing Division
The manufacturing division, a core segment, saw its revenue decline and losses widen.
Quarter Ended (31 Mar 2025)
Revenue: RM5.82 million
Loss After Tax: RM(2.72) million
Compared to Quarter Ended (31 Mar 2024)
Revenue: RM6.94 million
Loss After Tax: RM(0.84) million
Revenue for the manufacturing division dropped by 16.17%, primarily due to lower sales volume. Consequently, the loss after tax widened significantly from RM0.84 million to RM2.72 million.
Plantation Division
The plantation division experienced a slight dip in quarterly revenue and profit, despite an increase in average FFB (Fresh Fruit Bunch) prices.
Quarter Ended (31 Mar 2025)
Revenue: RM2.29 million
Profit After Tax: RM0.18 million
FFB Production: 2,459 MT
Average FFB Price: RM931
Compared to Quarter Ended (31 Mar 2024)
Revenue: RM2.45 million
Profit After Tax: RM0.47 million
FFB Production: 3,315 MT
Average FFB Price: RM738
While the average FFB price saw a healthy 26.15% increase, FFB production decreased by 25.82%, leading to a 6.53% reduction in revenue and a 61.3% drop in profit after tax for the quarter. However, it’s worth noting that year-to-date, the plantation division’s revenue and profit after tax actually showed an increase compared to the previous year, driven by overall higher FFB prices despite lower production volumes.
Trading Division
The trading division faced the steepest decline in revenue and shifted from profit to loss.
Quarter Ended (31 Mar 2025)
Revenue: RM5.92 million
Loss After Tax: RM(0.40) million
Compared to Quarter Ended (31 Mar 2024)
Revenue: RM35.49 million
Profit After Tax: RM0.31 million
Revenue plummeted by 83.3% in the trading division. The report indicates that this division did not generate any revenue in the immediate preceding quarter (Q2 2025) due to insufficient working capital but initiated business activity in the current quarter, recording RM5.92 million. Despite this new activity, it recorded a loss after tax of RM0.40 million compared to a profit of RM0.31 million in the same quarter last year.
Earnings Per Share (EPS)
The report provides EPS data for the current quarter compared to the immediate preceding quarter, rather than the same period last year. This shows a decrease in profitability.
| Metric | Quarter Ended 31 Mar 2025 | Quarter Ended 31 Dec 2024 |
|---|---|---|
| Net profit/(loss) attributable to owners (RM’000) | (1,090) | 106 |
| Basic earnings/(loss) per share (sen) | (0.09) | 0.01 |
The basic loss per share widened to 0.09 sen for the current quarter, compared to an earnings per share of 0.01 sen in the immediate preceding quarter, reflecting the overall negative performance.
Strategic Outlook and Risks Ahead
Despite the current financial headwinds, Scope Industries Berhad is actively pursuing strategies and monitoring market dynamics across its divisions:
Manufacturing Division: Capacity Expansion and Market Outreach
With the completion of a new plant, the manufacturing division’s production capacity has significantly increased. Management is focused on leveraging this by acquiring new customers and enhancing outreach efforts to optimize capacity utilization and drive long-term growth. This is a crucial move to turn around the division’s performance.
Plantation Division: Yield Improvement Amidst Price Volatility
The Crude Palm Oil (CPO) price saw a decrease in March 2025, and there’s an anticipation of further drops in the coming quarter. Despite constant harvesting yields, management is closely monitoring FFB production and implementing measures to improve yields and capitalize on favorable CPO price trends when they occur. This proactive management of agricultural assets is vital given commodity price fluctuations.
Trading Division: Working Capital Challenges and Monitoring
The trading division’s future activities will be closely monitored, particularly concerning the availability of working capital and associated risks. Addressing the working capital issue will be paramount for this division to contribute positively to the Group’s performance.
A Significant Corporate Development: Proposed Disposal
Perhaps the most significant development in this report is the proposed disposal of Scope’s entire equity interest in Scope Manufacturers (M) Sdn. Bhd., a wholly-owned subsidiary, to Luxshare Precision Singapore Pte. Ltd. for RM96.7 million. This conditional share acquisition agreement, entered into on 15 April 2025, is still ongoing. If completed, this strategic divestment of its manufacturing arm could fundamentally reshape Scope Industries’ business structure, financial health, and future focus, potentially providing a substantial cash injection and reducing operational complexities.
Summary and
Scope Industries Berhad’s latest quarterly report reflects a challenging period, marked by a substantial decline in overall revenue and a swing to a loss position for the nine months ended 31 March 2025. All three core divisions – Manufacturing, Plantation, and Trading – faced their own set of challenges, contributing to the Group’s subdued performance.
However, the report also highlights proactive management strategies, particularly in the manufacturing division’s capacity expansion and the plantation division’s focus on yield improvement. The proposed disposal of the manufacturing subsidiary is a game-changer. This potential divestment could significantly alter the company’s asset base, cash position, and future strategic direction, potentially allowing it to focus on its remaining segments or explore new ventures.
Key points to consider moving forward:
- Impact of Proposed Disposal: The successful completion and utilization of proceeds from the RM96.7 million disposal will be crucial. How will this capital be deployed? Will it strengthen the remaining businesses, fund new growth areas, or improve the Group’s financial stability?
- Divisional Turnaround: Can the manufacturing division effectively utilize its new capacity and acquire new customers to reverse its losses? Will the plantation division’s yield improvement efforts offset potential CPO price volatility? Can the trading division overcome its working capital constraints and contribute positively?
- Market Conditions: The broader economic environment and commodity price trends (especially CPO) will continue to play a significant role in the Group’s performance.
Scope Industries Berhad is clearly at a pivotal juncture. While the recent financial performance indicates significant headwinds, the strategic maneuvers, particularly the potential divestment of its manufacturing arm, suggest a company actively recalibrating its path. The coming quarters will be critical in observing how these strategies unfold and impact its financial trajectory.
What are your thoughts on Scope Industries’ strategic direction, especially with the proposed disposal of its manufacturing business? Do you think this will be a turning point for the company? Share your insights in the comments below!
