Greetings, fellow investors and market enthusiasts! It’s time to dive into the latest financial pulse of a key player in the Malaysian industrial landscape: EONMETALL GROUP BERHAD. The company recently released its unaudited consolidated results for the first quarter ended 31 March 2025, and while the numbers reveal a challenging period, they also shed light on strategic maneuvers and areas of resilience. Let’s unpack this report to understand what it means for Eonmetall’s journey ahead.
The core takeaway from this quarter is a significant shift from profitability to a loss, largely influenced by the absence of a one-off gain recorded in the previous year. However, the company is actively addressing headwinds, demonstrating a proactive approach in a tough market. Let’s dig into the details.
Q1 2025 Performance: A Closer Look
The first quarter of 2025 presented a tough operating environment for Eonmetall. Here’s how the key financial indicators stack up against the same period last year:
Q1 2025
Revenue: RM33.91 million
Profit/(Loss) Before Tax: (RM4.36 million)
Profit/(Loss) After Tax: (RM4.89 million)
Basic Earnings/(Loss) Per Share: (1.60 sen)
Q1 2024
Revenue: RM40.65 million
Profit/(Loss) Before Tax: RM21.20 million
Profit/(Loss) After Tax: RM20.83 million
Basic Earnings/(Loss) Per Share: 7.52 sen
As you can see, revenue for the current quarter decreased by 17% from RM40.65 million to RM33.91 million. This reduction, coupled with the absence of a substantial one-off gain from the disposal of property, plant, and equipment recorded in the previous year (which was RM22.65 million), led to a significant swing from a Profit Before Tax (PBT) of RM21.20 million in Q1 2024 to a Loss Before Tax (LBT) of RM4.36 million in Q1 2025. Similarly, the Profit After Tax (PAT) turned into a Loss After Tax (LAT), reflecting the challenging quarter.
Segmental Performance Breakdown
To truly understand the group’s performance, let’s break it down by business segments:
Machinery and Equipment Segment
This segment saw its revenue drop by 40.4%, from RM4.7 million in Q1 2024 to RM2.8 million in Q1 2025. Consequently, it registered a loss before tax of RM0.7 million, a stark contrast to the RM0.8 million profit recorded in the corresponding quarter last year. The decline is primarily attributed to lower gross profit and an increase in salaries due to the government’s minimum wage imposition.
Steel Product and Trading Activity Segment
The largest contributor to revenue, this segment also faced headwinds. Revenue decreased by 13.1% to RM31.2 million from RM35.9 million in the previous year’s corresponding quarter. This segment recorded a loss before tax of RM2.1 million, widening from a loss of RM0.6 million previously. The increased loss is mainly due to the decrease in revenue combined with higher costs of sales, including the impact of increased minimum wages.
Property, Investment Holding and Others Segment
This segment experienced the most dramatic shift. It reported a loss before tax of RM1.6 million, a significant decline from the RM21.0 million profit in Q1 2024. The primary reason for this swing is the absence of the one-off gain from compulsory land acquisition that boosted last year’s figures. This segment includes non-steel product trading, other manufacturing, and service income from the Group’s properties.
Financial Health and Cash Flow
Beyond the income statement, it’s crucial to look at the balance sheet and cash flow to assess the company’s financial health and liquidity. As of 31 March 2025, Eonmetall’s total assets stood at RM721.12 million, a slight decrease from RM731.39 million at the end of 2024. Total equity also saw a marginal dip to RM526.25 million from RM531.44 million.
In terms of cash flow, the Group reported net cash used in operating activities of (RM0.23 million) for the quarter, an improvement compared to (RM31.72 million) in the same period last year. This suggests better management of working capital despite the revenue decline. Net cash used in investing activities was (RM0.13 million), a significant reduction from the RM28.01 million generated last year (which included the proceeds from land disposal). Net cash generated from financing activities was RM8.00 million, primarily from a net increase in short-term borrowings, indicating some reliance on debt for liquidity. Overall, cash and cash equivalents increased by RM7.64 million, bringing the total to RM2.44 million at the end of the period.
Risks and Future Prospects
The Board of Directors acknowledges the challenging global business environment and anticipates a tough financial year for 2025. The steel industry, both globally and in Malaysia, is facing over-capacity and weakening demand. Additionally, tariffs initiated by the USA introduce further uncertainty, impacting Eonmetall’s efforts to re-enter the USA market. The potential for second-order effects from these global factors remains a concern.
However, it’s not all grim. The Group remains optimistic about its machinery and equipment segment, particularly due to the high crude palm oil (CPO) prices, which could drive increased demand for its palm oil-related machinery. Eonmetall is also actively managing its resources and operations prudently.
A notable strategic move is the proposed private placement of up to 30% of its issued shares, aiming to raise gross proceeds of approximately RM24.22 million. These funds are earmarked for:
- Repayment of bank borrowings: RM11.71 million
- Purchase of raw materials (coils, coating powder, etc.): RM7.03 million
- Operating and administrative expenses (staff costs, utilities, maintenance): RM4.68 million
- Expenses related to the private placement: RM0.80 million
This initiative, subject to shareholder approval, indicates a proactive approach to strengthen the balance sheet and secure working capital amidst the challenging market conditions.
Summary and
Eonmetall Group Berhad’s Q1 2025 results reflect a difficult quarter, marked by a revenue decline and a shift to a net loss, primarily due to the absence of a significant one-off gain from the previous year. The core steel product and trading segment, along with machinery and equipment, faced reduced demand and increased operating costs.
However, the company is not standing still. The proposed private placement is a clear signal of management’s intent to reinforce its financial position and ensure operational stability by addressing borrowings and securing working capital. Furthermore, the optimism in the palm oil-related machinery segment provides a potential bright spot, leveraging current high CPO prices.
Key points to monitor moving forward include:
- The successful execution and utilization of funds from the proposed private placement.
- The performance of the machinery and equipment segment, particularly how it capitalizes on CPO price trends.
- The broader global and domestic steel market conditions and Eonmetall’s ability to navigate over-capacity and tariffs.
- The group’s ongoing efforts to manage costs and enhance operational efficiency.
While the immediate outlook remains challenging, Eonmetall’s strategic actions to shore up its finances and focus on resilient segments are crucial for its long-term stability and growth. The company’s continued vigilance and prudent management of resources will be key in navigating the current economic landscape.
What are your thoughts on Eonmetall’s Q1 2025 performance and their strategic moves? Do you believe the proposed private placement will significantly aid their recovery and growth trajectory? Share your insights in the comments below!
