KIM TECK CHEONG’s Latest Quarter: Revenue Growth Amidst Profit Headwinds
KIM TECK CHEONG CONSOLIDATED BERHAD (KTC Group) has released its unaudited interim financial report for the third quarter ended 31 March 2025. This report offers Malaysian retail investors a closer look at the Group’s performance, highlighting notable revenue expansion while also revealing some challenges on the profit front. The Board remains optimistic, charting a course for continued positive results.
Core Financial Highlights: A Mixed Picture
The latest quarter for KTC Group showcases a robust increase in revenue, signaling effective market penetration and business expansion. However, this top-line growth was accompanied by a dip in profitability, primarily due to specific operational challenges.
Quarterly Performance: March 2025 vs. March 2024
Comparing the third quarter of 2025 against the same period last year, KTC Group demonstrated significant revenue growth, driven by the successful integration of new agencies. However, profit before tax saw a decline.
Q3 FY2025
Revenue: RM293.72 million
Profit Before Tax: RM4.89 million
Net Profit: RM3.17 million
Earnings Per Share: 0.20 sen
Q3 FY2024 (Same Period Last Year)
Revenue: RM268.74 million
Profit Before Tax: RM7.56 million
Net Profit: RM5.76 million
Earnings Per Share: 0.36 sen
Revenue for the current financial quarter increased by RM24.98 million, or a notable 9%, reaching RM293.72 million compared to RM268.74 million in the corresponding quarter last year. This increase was primarily attributed to sales generated from new agencies, which include the distribution of tobacco products, food and beverages, and household products.
However, the Group’s profit before tax decreased to RM4.89 million from RM7.56 million in the same period last year. This reduction in profitability was mainly due to weaker contributions from the Group’s operations in Brunei. Factors contributing to this included the depreciation of the Brunei Dollar since July 2024, which reduced the overall margin, and higher operating expenses incurred by the Brunei division as it prepared to move into a new warehouse.
Sequential Performance: March 2025 vs. December 2024
Looking at the immediate preceding quarter (Q2 FY2025 ended December 2024), the Group continued its revenue growth trajectory while maintaining a relatively consistent profit level.
Q3 FY2025
Revenue: RM293.72 million
Profit Before Tax: RM4.89 million
Q2 FY2025 (Immediate Preceding Quarter)
Revenue: RM272.81 million
Profit Before Tax: RM4.95 million
Revenue for the current quarter increased by RM20.92 million, or 8%, compared to the immediate preceding quarter. This growth was not only from new agencies but also from a moderate increase in total sales from existing agencies, driven by new product launches and promotional activities. Despite this revenue increase, the profit before tax remained relatively consistent, indicating stable operational efficiency quarter-on-quarter.
Segmental and Geographical Insights
For the nine months ended 31 March 2025, the Group’s revenue by business activity was primarily driven by its Distribution segment, which saw an increase to RM861.39 million from RM777.33 million in the same period last year. This highlights the Group’s core strength in distribution.
Geographically, East Malaysia remains the dominant market, contributing RM834.07 million in revenue for the nine months ended 31 March 2025, up from RM746.47 million previously. In contrast, revenue from Brunei decreased to RM30.38 million from RM33.72 million in the same period last year, reinforcing the challenges faced in that region.
Financial Health Snapshot
As of 31 March 2025, the Group’s total assets stood at RM367.00 million, a slight increase from RM362.19 million at 30 June 2024. Total liabilities increased marginally to RM185.15 million from RM184.34 million, while total equity also saw a healthy rise to RM181.85 million from RM177.85 million. This indicates a stable balance sheet with a slight improvement in shareholder equity.
The Group’s borrowings as at 31 March 2025 amounted to RM130.28 million, a slight decrease from RM131.36 million at 30 June 2024, showing a slight deleveraging. Cash flow from operating activities for the nine months ended 31 March 2025 remained positive at RM21.08 million, reflecting the Group’s ability to generate cash from its core operations.
| Borrowing Type | As at 31 March 2025 (RM’000) | As at 30 June 2024 (RM’000) |
|---|---|---|
| Current Borrowings | 117,315 | 119,400 |
| Non-Current Borrowings | 12,960 | 11,960 |
| Total Borrowings | 130,275 | 131,360 |
Navigating Challenges and Charting Future Growth
Despite the challenges faced in the Brunei operation, KTC Group’s Board remains optimistic about the Group’s overall business direction. Their confidence stems from ongoing strategic initiatives aimed at reinforcing the Group’s market position and improving operational efficiency.
The Group is actively pursuing new distributorships, with several still pending finalisation. These potential additions are expected to further bolster the top line. Beyond revenue growth, management is keenly focused on enhancing warehousing and logistic operations. The goal is clear: decrease unnecessary logistic charges, improve customer fulfilment service levels, and reduce stock returns and inventory write-offs. This focus on operational efficiency is crucial for improving profit margins in the long run.
The Board is confident that, barring unforeseen circumstances, the Group will continue to deliver positive results in the remaining period of the current financial year. This outlook is grounded in the strategic efforts to expand market reach and optimize internal processes.
Summary and
KIM TECK CHEONG CONSOLIDATED BERHAD’s latest quarterly report presents a nuanced picture. The Group has demonstrated commendable revenue growth, reflecting its ability to secure new distribution channels and expand its market presence. This top-line expansion is a positive indicator of the underlying business strength and market demand for its distributed products.
However, the decline in profit before tax for the quarter, primarily attributed to specific challenges in the Brunei operation including currency depreciation and increased pre-relocation operating expenses, highlights areas where the Group faces external and internal pressures. The management’s proactive stance on addressing these issues through operational efficiency improvements and new distributorships is a key factor to watch.
Key points to consider from this report:
- Strong revenue growth driven by new agency acquisitions.
- Profitability impacted by specific challenges in the Brunei market, including currency depreciation and higher operational costs.
- Strategic focus on improving warehousing and logistics efficiency to enhance margins.
- Active pursuit of new distributorships to further drive top-line growth.
- Board’s confidence in delivering positive results for the remainder of the financial year.
As retail investors, it’s essential to monitor how KTC Group executes its strategies to mitigate these challenges and capitalize on its growth initiatives in the coming quarters.
