Globaltec Formation Berhad Navigates Market Headwinds in Q3 FY2025: A Deep Dive into Performance and Prospects
As the financial year draws closer to its end, companies are laying bare their performance, offering a glimpse into their resilience and strategic direction. Today, we turn our attention to Globaltec Formation Berhad (GFB), a diversified Malaysian conglomerate, as it unveils its Third Quarterly Report for the financial year ending 30 June 2025. This report paints a picture of a company facing a challenging market environment, reflected in a dip in its latest quarterly profits, yet actively pursuing strategic initiatives, particularly within its burgeoning Energy segment, to secure future growth.
While the immediate financial figures present a mixed bag, GFB’s proactive measures and long-term vision, especially in the promising unconventional gas sector, are certainly worth a closer look. Let’s break down the key highlights from this latest report.
Core Data Highlights: A Snapshot of Performance
Globaltec Formation Berhad’s performance for the third quarter ended 31 March 2025 reflects the headwinds it currently faces, particularly in its traditional manufacturing sectors. Here’s how the numbers stack up against the same period last year:
Current Quarter (Q3 FY2025)
Revenue: RM38,368,000
Profit Before Tax: RM804,000
Profit for the Period: RM280,000
Basic Earnings Per Share: 0.184 sen
Corresponding Quarter (Q3 FY2024)
Revenue: RM46,570,000
Profit Before Tax: RM2,215,000
Profit for the Period: RM1,426,000
Basic Earnings Per Share: 0.492 sen
The Group’s revenue for the current quarter saw a decline of RM8.2 million, or approximately 17.6%, compared to the corresponding quarter of the previous year. This was largely driven by a significant RM7.5 million decrease in revenue from the Automotive division, as its customers grappled with heightened market competition and a loss of market share due to the influx of China car models. The Precision Machining, Stamping, and Tooling (PMST) division also experienced a RM0.5 million reduction due to weak demand, while the Resources segment saw a RM0.1 million decline, primarily from lower fresh fruit bunch (FFB) production affected by severe flooding in Sabah, though partially mitigated by higher FFB prices.
Consequently, the Group’s net profit for the current quarter fell sharply to RM0.5 million from RM1.3 million in the same period last year, representing an approximate 62.6% decrease in basic earnings per share. This was despite a marginal increase in net profit for the Automotive division, supported by improved margins. The PMST division was further impacted by foreign exchange losses due to the depreciation of the United States Dollar against the Ringgit, a reversal from the foreign exchange gains recorded in the prior year.
On a brighter note, GFB’s associate in the food and beverage retail industry contributed a higher share of profit, primarily due to improved cost management, offering a silver lining amidst the challenging quarter.
Segmental Performance: A Closer Look
Analyzing the performance across GFB’s key segments reveals the specific pressures and pockets of resilience:
| Segment/Division | Q3 FY2025 Revenue (RM’000) | Q3 FY2024 Revenue (RM’000) | Q3 FY2025 Net Profit/(Loss) (RM’000) | Q3 FY2024 Net Profit/(Loss) (RM’000) |
|---|---|---|---|---|
| PMST | 25,993 | 26,533 | 1,770 | 2,936 |
| Automotive | 11,119 | 18,657 | 222 | 170 |
| IMS (Total) | 37,112 | 45,190 | 1,992 | 3,106 |
| Resources | 1,256 | 1,380 | (605) | (438) |
| Energy | – | – | (98) | (620) |
| Investment Holding | – | – | (1,068) | (1,282) |
| Associate | – | – | 200 | 40 |
Comparing the current quarter with the preceding quarter (Q2 FY2025), the Group’s revenue declined by RM6.7 million, with all operating divisions contributing less. The IMS segment was impacted by customer shutdowns during the current quarter due to upcoming holidays and its shorter duration. The Automotive division faced softer demand and intensified competition. Meanwhile, the Resources segment recorded lower revenue due to declines in both FFB prices and production, again affected by severe flooding in Sabah.
This led to a lower net profit of RM0.5 million for the current quarter, down from RM2.3 million in the preceding quarter. The PMST division’s results were weaker due to foreign exchange losses. The Group’s associate also contributed a lower share of profit due to subdued consumer activity during the religious fasting period, contrasting with stronger seasonal spending in the preceding quarter.
Financial Health: Balance Sheet and Cash Flow
Globaltec Formation Berhad’s financial position as at 31 March 2025 shows a decrease in cash and cash equivalents by RM20.3 million, from RM84.8 million as at 30 June 2024 to RM64.5 million. This was primarily due to significant capital outflows totaling RM31.7 million, which included purchases of property, plant, and equipment, an investment property, and exploration expenditure. These outflows were partially offset by positive operating cash inflows, funds from the Energy segment’s rights issue completed in September 2024, and a net drawdown of borrowings amounting to RM4 million to finance the investment property acquisition.
The Group’s net assets and net assets per share also saw a decline compared to 30 June 2024, largely attributed to foreign exchange translation losses from foreign subsidiaries amounting to RM7.4 million and the payment of a RM1.9 million dividend to shareholders for the previous financial year. As a result of the additional borrowings, the Group’s gearing ratio increased slightly to 0.10 times as at 31 March 2025, up from 0.08 times as at 30 June 2024, indicating a modest increase in leverage.
Notably, the Board did not recommend any dividend for the financial period ended 31 March 2025, following the dividend of 0.7 sen per share (totaling RM1.9 million) paid on 19 November 2024 for the previous financial year.
Risk and Prospect Analysis: Charting the Future
Globaltec Formation Berhad operates within a dynamic economic landscape. While Malaysia’s economic outlook for 2025 remains moderate with stable growth, significant external headwinds persist. Global trade tensions, particularly between major economies like the US and China, continue to disrupt supply chains and dampen investor sentiment, posing downside risks to Malaysia’s trade-reliant sectors. Domestically, inflationary pressures from subsidy adjustments, higher energy costs, and wage increases are expected to impact production costs and consumer purchasing power.
The automotive sector, a key area for GFB’s IMS segment, is projected to normalize to a three-year low of 780,000 units in 2025, a “soft landing” after record sales in 2024. Factors like the US-China trade war, further targeted subsidy rationalization, and rising living costs could reduce discretionary spending on big-ticket items. However, improved supply chains, new model launches (including electrified vehicles), accommodative financing rates, and minimum wage hikes could provide support.
In response to these challenges, GFB is prioritizing cost vigilance and sustainability across its businesses. A strategic move is the completion of the Precision Stamping and Tooling division’s third facility in Indonesia in April 2024, which is expected to gradually contribute positively to the Group’s revenue, profits, and cash flows.
The Energy Segment: A Beacon of Future Growth
Perhaps the most exciting developments lie within GFB’s Energy segment, focused on unconventional gas (Coal Bed Methane or CBM) exploration and production. This segment, while not yet commercially producing, is making significant strides:
- Tanjung Enim POD 1 Approval: A major milestone was achieved on 17 June 2021, with the Indonesian Ministry of Energy and Mineral Resources (MEMR) approving the first Plan of Development (POD) for the Tanjung Enim production sharing contract (PSC). This is Indonesia’s first CBM POD, covering the development of 209 wells in two target areas with certified reserves of approximately 164.89 Bscf.
- Gas Sales Agreement with PGN: The Energy segment signed a Heads of Agreement (HOA) with PT Perusahaan Gas Negara Tbk (PGN) for the sale and purchase of CBM. The terms of the Gas Sales and Purchase Agreement (GSPA) have been finalized, pending approval for gas allocation and price determination from MEMR. This initial gas sale is expected to commence at 1 million standard cubic feet per day (mmscfd), gradually increasing to a total peak production of 25 mmscfd as approved under the Tanjung Enim POD 1.
- Drilling Site Preparation: The Energy segment has commenced drilling site preparation, including access road grading, land clearing, and foundation works, indicating readiness for field development and surface facility construction.
- New Gross Revenue Split: A significant positive development is the new simplified gross revenue split for the unconventional gas industry, approved by MEMR on 7 August 2024. This scheme allocates 95% to the contractor and 5% to the Indonesian Government, representing an approximate 9% improvement for the contractor over the previous framework. This enhances project profitability and flexibility, a key factor for GFB’s long-term success in the region. The Energy segment has applied for conversion to this gross split-based PSC.
- Muralim and Muara Enim PSCs: Efforts continue in the Muralim PSC with dewatering processes and an application for a production testing extension to gather necessary data for a future POD proposal. The Muara Enim PSC received an additional exploration period until September 2025, with environmental permit applications underway.
Summary and
Globaltec Formation Berhad’s latest quarterly report highlights the challenges posed by a competitive and volatile market, particularly impacting its manufacturing segments. The decline in revenue and net profit for the quarter underscores the need for strategic adaptation and cost management. However, the Group’s proactive measures, such as the expansion of its PMST division in Indonesia, demonstrate its commitment to resilience and future growth in its traditional businesses.
The Energy segment stands out as a significant long-term growth driver. The progress in the Tanjung Enim PSC, the nearing finalization of the gas sales agreement with PGN, and the highly favorable new gross revenue split for unconventional gas in Indonesia are pivotal developments. These initiatives, once they transition into commercial production, are poised to transform the Group’s financial landscape and provide a strong diversified revenue stream.
While the immediate quarter presents a cautious outlook, the strategic groundwork being laid, especially in the Energy sector, suggests a company with a clear long-term vision. As retail investors, it’s crucial to consider both the current operational challenges and the significant potential embedded in GFB’s strategic pivot towards unconventional gas.
Key points to monitor for future performance include:
- The finalization and signing of the Gas Sales and Purchase Agreement (GSPA) with PGN and the approval of gas allocation and price determination by MEMR.
- The commencement of commercial gas production from the Tanjung Enim PSC.
- The impact of the new simplified gross revenue split on the Energy segment’s profitability.
- The ability of the IMS segment to mitigate market competition and demand fluctuations, particularly in the automotive division.
- The overall economic environment, including global trade tensions and domestic inflationary pressures, and their effect on consumer spending and industrial demand.
Looking Ahead: What’s Next for Globaltec?
Globaltec Formation Berhad is clearly at an interesting juncture. While its established manufacturing businesses navigate a competitive landscape, the strategic investments and progress in the Energy segment offer a compelling long-term narrative. The transition from exploration to commercial production in its CBM projects could be a game-changer, potentially unlocking significant value for shareholders.
Do you think Globaltec Formation Berhad can successfully leverage its Energy segment to offset the challenges in its traditional businesses and achieve sustained growth in the coming years? Share your thoughts and insights in the comments section below!
