Another quarter, another look into the performance of Malaysian companies! Today, we’re diving deep into LEFORM BERHAD’s (Registration No. 199501001582 (330776-K)) unaudited interim financial report for the quarter ended 31 March 2025. This report provides a crucial glimpse into the company’s operational health and strategic direction amidst evolving market conditions.
While the report reveals a notable dip in revenue and profit compared to the same period last year, it also highlights the company’s proactive measures to navigate challenges and position itself for long-term growth, especially within a resilient Malaysian economy and a booming construction sector. Let’s break down the key takeaways.
Q1 2025 Performance: A Closer Look at the Numbers
LEFORM BERHAD’s first quarter of 2025 saw a decrease in its top and bottom lines compared to the same quarter in the previous year. This performance reflects the challenging operating environment, primarily due to lower average selling prices and sales volumes in its core segments.
Revenue
Q1 2025
Q1 2024
Revenue for the quarter ended 31 March 2025 stood at RM82.57 million, marking a 22.8% decline from RM106.90 million recorded in the same period last year. This reduction was primarily driven by a drop in both average selling prices and sales volume across the Group’s manufacturing and trading segments.
Profit Before Tax (PBT)
Q1 2025
Q1 2024
The Group’s Profit Before Tax (PBT) experienced a significant decrease of 85.9%, falling to RM0.23 million from RM1.63 million in Q1 2024. This sharp decline is directly linked to the lower gross profit in value, which was a consequence of the reduced average selling prices and sales volumes.
Profit for the Period
Q1 2025
Q1 2024
Net profit for the period attributable to owners of the Company was RM0.33 million, a substantial drop from RM1.70 million in the corresponding quarter last year. This reflects the impact of lower revenue and profit before tax, despite a slight improvement in overheads.
Basic Earnings Per Share (EPS)
Q1 2025
Q1 2024
Consequently, basic earnings per share (EPS) for the quarter stood at 0.02 sen, down from 0.11 sen in Q1 2024, mirroring the overall decline in profitability.
Segmental Performance Breakdown
LEFORM operates across three main segments: Manufacturing, Trading, and Transportation. Each segment contributed to the overall performance, though with varying impacts:
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Q1 2025 PBT (RM’000) | Q1 2024 PBT (RM’000) |
|---|---|---|---|---|
| Manufacturing | 72,734 | 98,281 | 524 | 1,680 |
| Trading | 21,671 | 36,665 | (384) | 390 |
| Transportation | 695 | 609 | 59 | (26) |
Manufacturing Segment
The Manufacturing segment, which produces steel pipes, guardrails, and flat steel products, saw its revenue decrease by 26.0%, or RM25.5 million, to RM72.73 million. Profit before tax for this segment also fell significantly by 68.8%, or RM1.2 million, to RM0.52 million. This was primarily due to lower average selling prices and sales volumes, which reduced gross profit, outweighing slight improvements in overheads.
Trading Segment
The Trading segment, complementary to manufacturing, experienced an even steeper decline. Revenue dropped by 40.9%, or RM15.0 million, to RM21.67 million. This segment recorded a loss before tax of RM0.38 million, a stark contrast to the profit of RM0.39 million in the same quarter last year. The challenges here mirrored those in manufacturing: lower selling prices and reduced sales volume.
Transportation Segment
The Transportation segment, responsible for logistics, showed a positive shift, turning a profit of RM0.06 million compared to a loss of RM0.03 million in Q1 2024. However, its fluctuations have no significant impact on the Group’s overall performance.
Financial Health Snapshot
As of 31 March 2025, LEFORM BERHAD’s financial position remains robust, though with some shifts. Total assets stood at RM455.53 million, slightly down from RM456.87 million at the end of 2024. Current assets, including inventories and receivables, saw a slight reduction, while cash and bank balances increased to RM7.26 million from RM4.14 million.
Equity attributable to owners of the Company slightly increased to RM220.17 million from RM219.84 million, reflecting the retained earnings for the period. Net assets per share attributable to owners of the Company improved marginally to 14.87 sen from 14.84 sen as at 31 December 2024.
On the liabilities side, total liabilities saw a minor decrease to RM234.54 million from RM235.98 million. Loans and borrowings, a key component, decreased in current liabilities but increased in non-current liabilities. The Group’s overall borrowings stood at RM167.47 million as at 31 March 2025, slightly lower than RM169.98 million at the end of 2024.
Cash flow from operating activities was a positive RM9.87 million for the quarter, a significant improvement from a negative RM30.75 million in the same period last year. This was largely due to favourable changes in working capital, particularly in trade and other payables. However, net cash and cash equivalents saw a decrease of RM5.69 million during the period, ending at a negative balance of RM10.87 million.
Risks and Prospects: Navigating the Future
Despite the challenging quarter, LEFORM BERHAD’s outlook remains cautiously optimistic, bolstered by a resilient Malaysian economy and specific sectoral tailwinds. The construction sector, a key demand driver for steel products, continues its double-digit growth, which is a positive indicator for the Group.
However, the domestic steel industry faces persistent challenges, including intense competition and high operational costs, which have compressed profit margins. While the Group is not directly impacted by U.S. tariffs as it doesn’t export to the U.S., it remains vigilant about global market shifts.
To address these challenges and capitalize on opportunities, LEFORM is actively implementing several strategic initiatives:
- Infrastructure Expansion: Finalizing the construction of a new integrated warehouse facility to significantly increase storage capacity and unlock production potential.
- Cost Efficiency: Ongoing efforts to improve cost efficiency through better inventory control, reduced waste, and optimized manpower.
- Market Diversification: The recent acceptance of a subcontract for guardrail works on the West Coast Expressway (RM3.0 million over 21 months) highlights the Group’s continued participation in significant infrastructure projects.
The Group’s decision to maintain the Overnight Policy Rate at 3% by Bank Negara Malaysia reflects confidence in the country’s economic fundamentals, providing a stable macroeconomic environment for businesses. The recent acquisition of an additional 20% equity interest in LF Highway Products Sdn Bhd, making it a 70% owned subsidiary, also points to strategic moves to consolidate control and potentially enhance synergies.
Summary and
LEFORM BERHAD’s Q1 2025 results reflect a period of adjustment marked by revenue and profit declines, primarily due to market-driven lower selling prices and sales volumes in its core steel manufacturing and trading segments. While the immediate financial performance shows contraction, the underlying operational cash flow improved significantly, and the company’s balance sheet remains stable.
The management is keenly aware of the prevailing headwinds, such as stiff competition and high operational costs. Their strategic responses, including the expansion of storage capacity with the new warehouse and ongoing cost efficiency initiatives, are critical steps to enhance long-term resilience and profitability. Furthermore, the robust growth in Malaysia’s construction sector provides a supportive backdrop for the Group’s steel-related products.
Key points to consider:
- Significant year-on-year decline in both revenue and profit before tax.
- Core manufacturing and trading segments experienced reduced selling prices and sales volumes.
- Improved cash flow from operating activities, but overall net cash and cash equivalents decreased.
- Strategic initiatives like new warehouse construction and cost optimization are underway.
- The construction sector’s strong growth in Malaysia offers a positive demand outlook.
- The Group faces ongoing challenges from stiff competition and high operational costs within the domestic steel industry.
The Group’s cautious optimism for its long-term prospects appears grounded in these strategic efforts and the broader economic environment. While the immediate quarter presented challenges, the focus remains on internal efficiencies and leveraging sectoral growth opportunities.
From a professional perspective, LEFORM BERHAD appears to be in a phase of strategic consolidation and efficiency enhancement. The decline in revenue and profit is a clear signal of the competitive pressures and market dynamics affecting the steel industry. However, the positive operating cash flow generation is a healthy sign, indicating that core operations are still generating cash despite lower profitability. The management’s focus on completing the new integrated warehouse and improving cost efficiency are prudent steps that could yield benefits in future quarters, especially as the construction sector continues its strong performance.
Do you think LEFORM BERHAD’s strategic initiatives will be enough to overcome the current market challenges and return to stronger profitability in the coming quarters? Share your thoughts in the comments below!
For more insights into Malaysian companies and market trends, be sure to check out our other articles on [Related Article 1] and [Related Article 2].
