MBM Resources Berhad Q1 2025: Navigating Headwinds with Strategic Vision
MBM Resources Berhad, a significant player in Malaysia’s vibrant automotive sector, has recently unveiled its unaudited condensed consolidated financial statements for the first quarter ended 31 March 2025. This report offers a critical snapshot of the company’s performance amidst an evolving economic landscape and heightened market competition. While the quarter presented a set of challenges leading to a dip in revenue and profit, MBM Resources is actively implementing strategic initiatives aimed at fostering long-term growth and enhancing shareholder value.
Core Financial Highlights: A Closer Look at Q1 2025
The first quarter of 2025 saw MBM Resources contend with a softening market demand, which impacted its top and bottom lines when compared to the same period last year. Let’s dive into the key figures:
Q1 2025 Performance
- Revenue: RM574.316 million
- Profit Before Tax (PBT): RM84.901 million
- Profit for the Period Attributable to Equity Holders: RM71.387 million
- Basic and Diluted Earnings Per Share (EPS): 18.26 sen
Compared to Q1 2024
- Revenue: RM617.136 million (6.9% decrease)
- Profit Before Tax (PBT): RM95.035 million (10.7% decrease)
- Profit for the Period Attributable to Equity Holders: RM80.244 million
- Basic and Diluted Earnings Per Share (EPS): 20.53 sen
The Group’s overall revenue declined by RM42.8 million, or 6.9%, while Profit Before Tax (PBT) saw a decrease of RM10.1 million, or 10.7%. This downturn was primarily attributed to lower vehicle sales and production volumes across its operations.
Segmental Performance Insights
Understanding the performance of each business unit provides a clearer picture of the Group’s results:
Motor Trading and Assembly Division
This division recorded revenue of RM500.827 million, a 7.5% decrease from RM541.224 million in the corresponding quarter last year. PBT for the division also fell by 16.8% to RM11.018 million from RM13.240 million. The decline was mainly due to reduced supply of Perodua vehicles and lower Volvo sales, exacerbated by intensified competition from other premium brands. This aligns with the overall 7.4% decline in Malaysia’s Total Industry Volume (TIV) for the quarter. However, there were bright spots: commercial vehicle sales under the Daihatsu marque performed well, and there was encouraging demand for Jaecoo models, alongside sustained aftersales revenue and margins.
Auto Parts Manufacturing Division
The Auto Parts Manufacturing Division posted quarterly revenue of RM72.753 million, a 3.4% decrease from RM75.275 million in Q1 2024. Despite the revenue dip, this division notably outperformed the broader market’s 15.6% reduction in Total Industry Production (TIP). PBT for this segment declined by 24.7% to RM5.479 million from RM7.272 million, reflecting the impact of softer top-line performance and inflationary increases in operating costs.
Contributions from Joint Ventures and Associates
The share of results from a joint venture decreased significantly by 45.7% to RM4.249 million, down from RM7.828 million in Q1 2024. This was due to softer production demand from carmakers and the absence of a non-recurring bulk purchase that benefited the corresponding quarter in 2024. Similarly, the Group’s associates contributed RM65.803 million, a slight 3.8% decline from RM68.371 million, primarily due to marginally lower production and sales volumes.
Financial Health and Cash Flow
As at 31 March 2025, MBM Resources maintained a robust financial position. Total assets increased to RM2,814.677 million from RM2,740.156 million at the end of 2024, and total equity also grew to RM2,627.920 million from RM2,547.124 million. Consequently, net assets per share attributable to owners of the company improved to RM5.88 from RM5.70. While cash and bank balances saw a slight decrease to RM255.870 million from RM258.322 million, the Group’s short-term borrowings were reduced to RM41.540 million from RM45.906 million, indicating prudent financial management. However, net cash from operating activities significantly reduced to RM6.166 million in Q1 2025, compared to RM38.027 million in Q1 2024, reflecting the impact of the lower sales and production volumes.
Navigating Risks and Charting Future Prospects
The automotive industry, both globally and locally, is facing a period of heightened uncertainty. MBM Resources acknowledges these challenges and has outlined its strategies to navigate them:
Key Market & Geopolitical Factors:
- Global Trade Uncertainties: The recent reciprocal tariffs announced by the US, initially impacting Malaysia with a 24% tariff and subsequently 10%, are creating geopolitical volatilities and trade uncertainties. The Malaysian government is actively negotiating to further reduce this impact.
- Impact on GDP: Malaysia’s 2025 GDP growth is expected to fall short of its 4.5%-5.5% target, largely due to these global economic uncertainties and the resulting foreign exchange fluctuations.
- Automotive Industry Forecast: The Malaysian Automotive Association (MAA) has forecasted a lower Total Industry Volume (TIV) of 780,000 units for 2025, a 4.5% contraction from 2024. This is primarily driven by the US-China trade war and the impending RON95 petrol subsidy rationalisation.
Opportunities and Strategies:
- Potential Upsides: Opportunities exist from potentially lower interest rates, higher minimum wage, which could boost consumer purchasing power, and the front-loading of Completely Knocked Down (CKD) vehicle sales ahead of the Open Market Value (OMV) excise duties implementation in January 2026.
- Intense Competition: The Group anticipates continued heightened competition from both local and foreign brands, particularly from Chinese Original Equipment Manufacturers (OEMs).
- Long-Term Value Creation: MBM Resources is proactively focusing on strategic initiatives, including upgrading and refurbishing existing outlets to enhance customer experience, expanding into new locations to improve accessibility, taking on new dealerships to strengthen its product portfolio, and evaluating high-quality businesses for potential Mergers & Acquisitions (M&A).
