Navigating the Headwinds: A Deep Dive into Inari Amertron’s Latest Quarterly Performance
Inari Amertron, a prominent name in Malaysia’s semiconductor industry, has just released its unaudited consolidated financial results for the third quarter ended 31 March 2025 (Q3 FY2025). This report offers a crucial glimpse into the company’s performance amidst a dynamic global economic landscape. While the numbers reflect a challenging period marked by lower revenue and profit, they also highlight Inari Amertron’s strategic focus and resilience in navigating market headwinds. Let’s break down the key takeaways from this latest financial disclosure.
Key Takeaway: Inari Amertron faced a challenging Q3 FY2025 with revenue and profit declines, primarily due to lower product volumes and unfavourable foreign exchange movements. However, the company continues to focus on strategic growth areas and has proposed a new interim dividend for shareholders.
Q3 FY2025 Performance: A Closer Look
For the individual quarter, Inari Amertron reported a decrease in its top and bottom lines compared to the same period last year. This was largely attributed to comparatively lower volume loading of products across all business segments, coupled with unfavourable foreign exchange rate movements and start-up losses from its China subsidiary.
Q3 FY2025
Revenue: RM308.3 million
Profit Before Tax: RM57.2 million
Profit After Tax (PAT): RM53.5 million
PAT Attributable to Owners: RM50.1 million
Basic Earnings Per Share (EPS): 1.46 sen
Q3 FY2024
Revenue: RM347.6 million
Profit Before Tax: RM76.8 million
Profit After Tax (PAT): RM73.9 million
PAT Attributable to Owners: RM87.6 million
Basic Earnings Per Share (EPS): 1.97 sen
The numbers show a significant dip: revenue was down 11.3%, while PAT attributable to owners saw a steeper decline of 42.8%. The start-up loss from the China subsidiary alone accounted for RM4.95 million in the quarter, which, if excluded, would have softened the PAT decrease to 20.9%.
Year-to-Date Performance: Cumulative View
Looking at the cumulative nine-month period ended 31 March 2025, the trends largely mirror the quarterly performance, indicating a sustained period of lower volume loading and product mix impacts.
9 Months FY2025
Revenue: RM1.045 billion
Profit Before Tax: RM174.8 million
Profit After Tax (PAT): RM163.7 million
PAT Attributable to Owners: RM121.3 million
Basic Earnings Per Share (EPS): 4.48 sen
9 Months FY2024
Revenue: RM1.146 billion
Profit Before Tax: RM256.8 million
Profit After Tax (PAT): RM245.8 million
PAT Attributable to Owners: RM255.0 million
Basic Earnings Per Share (EPS): 6.56 sen
For the nine-month period, revenue decreased by 8.8%, and PAT attributable to owners fell by 52.5%. The China subsidiary’s start-up losses accumulated to RM15.70 million over this period, significantly impacting the overall profitability.
Geographical Revenue Breakdown
While Inari Amertron operates as a single business segment (manufacturing of electronic products), its revenue is geographically diversified. Singapore remains the largest contributor, though all regions experienced a decline in revenue for both the quarter and the cumulative period:
| Region | Q3 FY2025 (RM’000) | Q3 FY2024 (RM’000) | 9 Months FY2025 (RM’000) | 9 Months FY2024 (RM’000) |
|---|---|---|---|---|
| Malaysia | 14,820 | 17,523 | 44,715 | 55,058 |
| Singapore | 269,025 | 305,474 | 920,641 | 1,014,269 |
| China | 15,857 | 21,589 | 57,936 | 65,590 |
| Others | 8,548 | 3,043 | 21,933 | 10,720 |
| Total | 308,250 | 347,629 | 1,045,225 | 1,145,637 |
Financial Health and Cash Flow
As at 31 March 2025, Inari Amertron maintains a robust financial position. Its cash and cash equivalents stood at RM2.138 billion, a slight decrease from RM2.261 billion as at 30 June 2024, but still indicative of strong liquidity. The company also reported no outstanding borrowings, which speaks volumes about its financial prudence.
However, the cash flow from operating activities for the nine-month period saw a notable reduction to RM239.6 million from RM433.4 million in the prior year, reflecting the lower profitability. Investing activities shifted from generating cash to utilising it, primarily due to acquisitions of property, plant, and equipment. Financing activities also saw increased cash usage, largely due to dividend payments.
Risks and Prospects: Navigating a Complex Landscape
Inari Amertron’s commentary on prospects acknowledges the complex macroeconomic environment. While global smartphone shipments showed a modest growth in Q1 2025 and the temporary suspension of smartphone tariffs offers some relief, broader concerns remain. The International Monetary Fund (IMF) forecasts a slowdown in global GDP growth, exacerbated by heightened trade tensions. These tensions continue to influence investor sentiment and cross-border economic activity.
Within the semiconductor industry, Inari Amertron observes selective growth, with strong demand in data communications, flat growth in smartphones, and a softening in industrial semiconductors. The ongoing US tariff negotiations are leading to supply chain realignments and impacting costing and margins, while wider foreign exchange fluctuations add another layer of difficulty in maintaining gross margins.
Despite these challenges, the Group maintains a cautiously optimistic outlook for the remainder of FY2025 and FY2026, anticipating an easing of tariff tensions. Their strategic focus remains clear:
- Growing the China subsidiary business.
- Enhancing the Group’s production capacity.
- Maintaining utilisation and operational efficiency.
- Sustaining profitability.
- Actively exploring strategic partnerships to adapt to supply chain shifts and the evolving geopolitical landscape.
Shareholder Returns: A Consistent Approach
Despite the challenging quarter, Inari Amertron continues its commitment to shareholder returns. The Board of Directors proposed a third interim exempt dividend of 1.30 sen per ordinary share for the financial year ending 30 June 2025. This dividend is payable on 8 July 2025, with an entitlement date of 10 June 2025.
The total dividends for FY2025 (including the proposed third interim) stand at 4.30 sen per share so far, compared to 7.70 sen for the full FY2024. This reflects a measured approach to dividend payouts in light of current performance.
Summary and
Inari Amertron’s Q3 FY2025 results reflect a period of adjustment in a volatile market. The declines in revenue and profit highlight the immediate pressures from lower product volumes and foreign exchange movements, exacerbated by initial losses from its new China operations. However, the company’s strong balance sheet, with substantial cash reserves and no outstanding borrowings, provides a solid foundation to navigate these headwinds.
The semiconductor industry, while facing some selective challenges, is also seeing opportunities, particularly with the acceleration of generative AI. Inari Amertron’s management appears to be taking a proactive stance, focusing on strategic expansion in China, operational efficiency, and exploring partnerships. Their cautious optimism for the future, coupled with a continued commitment to shareholder dividends, suggests a long-term vision despite short-term challenges.
Key points from the report that warrant attention:
- Revenue and Profit Decline: The primary concern is the significant drop in both quarterly and cumulative revenue and profit, mainly due to lower product volumes and adverse forex movements.
- China Subsidiary Losses: The start-up losses from the China subsidiary are a notable drag on profitability, though management is focused on growing this segment.
- Macroeconomic Headwinds: Global trade tensions and a forecasted slowdown in GDP growth present ongoing challenges for the industry.
- Forex Volatility: Fluctuations in foreign exchange rates continue to impact gross margins.
- Supply Chain Realignment: The ongoing tariff negotiations are causing shifts in global supply chains, which could impact operational costs and strategies.
Overall, Inari Amertron is facing a challenging period, but its strategic initiatives and robust financial health position it to adapt and potentially capitalize on future opportunities in the evolving semiconductor landscape.
What are your thoughts on Inari Amertron’s performance this quarter? Do you believe their strategic focus on China and operational efficiency will help them regain momentum in the coming financial periods? Share your insights in the comments below!
