Zantat Holdings Berhad Navigates Q1 FY2025 Amidst Market Headwinds and Strategic Shifts
Greetings, fellow investors! Today, we’re diving into the latest financial report from Zantat Holdings Berhad for the first quarter and year-to-date ended 31 March 2025. This report offers a crucial glimpse into the company’s performance, revealing a challenging quarter marked by a decline in revenue and profitability when compared to the same period last year. However, it also highlights Zantat’s proactive strategies to adapt to an evolving market, particularly its focus on sustainability. Let’s unpack the numbers and understand what this means for the company’s future.
Core Data Highlights: A Mixed Bag of Performance
Zantat’s first quarter results present a nuanced picture. While the company faced significant headwinds compared to the previous year, there are signs of sequential improvement from the immediate preceding quarter.
A Challenging Quarter on the Top Line
For the quarter ended 31 March 2025, Zantat recorded a revenue of RM24.0 million. This represents a notable decrease compared to the RM28.8 million achieved in the same quarter last year.
Revenue (Q1 2025)
Revenue (Q1 2024)
The 16.7% decline in revenue was primarily driven by a 23.1% reduction in sales tonnage from the production of Ground Calcium Carbonate (GCC), which saw its revenue drop from RM24.7 million to RM19.0 million. GCC remains the largest contributor to Zantat’s top line, accounting for 79.5% of total revenue in the current quarter. On a brighter note, the production of Calcium Carbonate (CC) dispersion showed resilience, with revenue increasing by 17.2% from RM2.9 million to RM3.4 million, partially mitigating the overall decline.
Profitability Takes a Hit
The impact of lower revenue, coupled with relatively constant operating costs, weighed heavily on Zantat’s profitability. The Group reported a loss before tax of RM0.5 million for the current quarter, a stark contrast to the RM2.8 million profit before tax recorded in the same quarter last year.
Profit Before Tax (Q1 2025)
Profit Before Tax (Q1 2024)
This 117.2% swing to a loss was mainly due to a 38.4% decrease in gross profit, falling from RM11.8 million to RM7.3 million. The report indicates that labour and factory overhead costs remained fairly constant despite the revenue decline, squeezing profit margins. Furthermore, other income decreased by 41.0%, primarily due to the absence of a RM0.5 million unrealised gain on foreign exchange that was present in the corresponding quarter last year. This was slightly offset by an insurance refund received in the current quarter. On a positive note, the company managed to reduce selling and distribution expenses by 11.7% and administrative expenses by 25.2%, mainly due to lower logistics costs and reduced listing and corporate exercise expenses.
Sequential Improvement from Previous Quarter
While the year-on-year comparison shows a decline, Zantat demonstrated sequential improvement when compared to the immediate preceding quarter (Q4 2024). Revenue increased by 5.3% to RM24.0 million from RM22.8 million in Q4 2024.
Revenue (Q1 2025)
Revenue (Q4 2024)
More significantly, the loss before tax narrowed by 56.3%, from RM1.1 million in Q4 2024 to RM0.5 million in Q1 2025. This improvement was largely attributed to a 12.2% increase in gross profit, driven by the higher revenue.
Financial Health and Cash Flow Overview
As of 31 March 2025, Zantat’s total assets stood at RM107.0 million, an increase from RM103.9 million at the end of December 2024. Total equity also saw a slight increase to RM74.4 million from RM73.4 million, while total liabilities increased to RM32.6 million from RM30.5 million. Net assets per ordinary share remained stable at RM0.26.
The Group’s total borrowings increased to RM14.4 million as at 31 March 2025 from RM10.7 million as at 31 December 2024.
Total Borrowings (31 Mar 2025)
Total Borrowings (31 Dec 2024)
From a cash flow perspective, the picture is less rosy. Net cash flow from operating activities shifted from a positive RM0.5 million in Q1 2024 to a negative RM3.4 million in Q1 2025. This, coupled with higher cash outflow from investing activities and lower inflow from financing activities, resulted in a net decrease in cash and cash equivalents of RM0.4 million for the quarter, compared to a net increase of RM12.7 million in the same period last year.
The report also details the utilisation of proceeds from the Public Issue (IPO) and Special Issue. Out of the RM14.0 million raised from the IPO, RM10.6 million has been utilised as of 31 March 2025. Similarly, from the RM1.6 million raised through the Special Issue, RM0.2 million has been utilised, mainly for repayment of bank borrowings and expenses related to the Special Issue.
| Details of utilisation | Initial Proceeds (RM’000) | Actual Utilisation (RM’000) | Balance Unutilised (RM’000) |
|---|---|---|---|
| Upgrading of R&D facilities | 3,830 | (2,270) | 1,560 |
| Upgrading of Calrock Perak Plant’s Infrastructure | 1,000 | – | 1,000 |
| Investment in high efficiency machine components and industrial automation | 1,350 | (1,165) | – |
| Repayment of bank borrowings | 3,390 | (3,390) | – |
| Working capital | 1,430 | (794) | 821 |
| Estimated listing expenses | 3,000 | (3,000) | – |
| Total | 14,000 | (10,619) | 3,381 |
Navigating Headwinds: Market Challenges and Strategic Response
Zantat’s Q1 FY2025 performance reflects the challenging global trade landscape. The company observed a moderation in demand across several key end-use industries, including plastics, gloves, and coatings, which directly impacted its calcium carbonate sales.
Furthermore, ongoing disruptions in global shipping continued to pose a significant challenge. Instability in key maritime routes led to higher freight rates and delays in order fulfillment, adding to operational costs and affecting customer deliveries. Recent trade data for Malaysia’s Calcium Carbonate exports in March 2025 also showed a 13.2% drop compared to February, while imports surged by 153.1%. Despite this, Malaysia maintained a positive trade balance, indicating underlying demand, albeit with short-term market corrections.
In response to these uncertainties, Zantat is strategically shifting its focus. Rather than immediate expansion into new territories, the Group is concentrating on engaging with sustainability-driven clients and sectors. This move aligns with the global trend of manufacturers accelerating their transition towards environmentally responsible sourcing. Functional additives like Calcium Carbonate are crucial in this shift, as they help reduce polymer content and carbon emissions in various products. Zantat’s in-house technical capabilities are expected to keep them ahead of evolving industry requirements.
The company’s bioplastics division is also scaling its downstream applications, aiming to support a more circular materials economy. This strategic pivot positions Zantat to capitalize on the growing demand for sustainable material solutions.
Looking into the second quarter of 2025, Zantat expresses cautious optimism. The management believes that their strategic shift towards value-led partnerships, combined with a commitment to innovation and operational agility, will foster continued resilience and reinforce their leadership in the sustainable material solutions sector.
Summary and
Zantat Holdings Berhad’s first quarter of fiscal year 2025 was undoubtedly challenging, marked by a decline in revenue and a shift to a loss compared to the same period last year. This was largely influenced by softer demand in key industries and persistent global shipping disruptions. However, it’s worth noting the sequential improvement from the immediate preceding quarter, which suggests some stabilization. The company’s strategic pivot towards sustainability-driven clients and sectors, coupled with its focus on innovation in areas like bioplastics, appears to be a forward-looking approach to navigate the current headwinds and position itself for future growth.
Key points to consider moving forward:
- The Group’s reliance on the GCC segment means its performance is sensitive to demand fluctuations in end-use industries like plastics, gloves, and coatings.
- Ongoing global shipping disruptions and elevated freight rates could continue to impact operational costs and supply chain efficiency.
- The success of Zantat’s strategic shift towards sustainability-driven clients and the scaling of its bioplastics division will be crucial for its long-term growth trajectory.
- The negative cash flow from operations in the current quarter warrants attention, and monitoring its trend in subsequent quarters will be important.
While the immediate outlook remains cautiously optimistic, Zantat’s commitment to innovation and operational agility in a challenging environment is a positive sign. The company’s proactive stance in adapting to market shifts, especially in the growing sustainability space, could be a key differentiator in the coming periods.
What are your thoughts on Zantat’s strategic shift towards sustainability? Do you believe this will be enough to counter the ongoing market headwinds and drive future growth for the company? Share your views in the comments section below!
Stay tuned for more updates and analyses on Malaysian companies. Happy investing!
