METROD HOLDINGS BERHAD Q1 2025 Latest Quarterly Report Analysis

Greetings, fellow investors and market watchers!

Today, we’re diving into the latest financial heartbeat of

, a diversified group with significant interests in both the Copper and Hospitality sectors. Their interim report for the first quarter ended 31 March 2025 has just landed, and it paints a picture of growth amidst a landscape of evolving global challenges.

The headline? METROD has demonstrated a robust increase in revenue and pre-tax profit, signaling resilience and strategic execution. However, as with any dynamic business, the journey isn’t without its headwinds. Let’s unpack the numbers and the narrative behind them to understand what this means for the company’s trajectory.

Q1 2025: A Snapshot of Performance

METROD HOLDINGS BERHAD has kicked off 2025 with a commendable performance, showcasing growth across key financial indicators when compared to the same period last year. Let’s look at the core figures:

The Group’s revenue surged by 15% to RM1,524.6 million, largely driven by higher sales volumes in their Copper business. This top-line growth translated into a 3% increase in EBITDA to RM31.4 million, reflecting overall better performance from both segments. Profit Before Tax (PBT) also saw a significant jump of 23%, reaching RM7.9 million.

However, a closer look at the Profit Attributable to Owners reveals a decrease of 43% to RM1.6 million. This is primarily due to a higher allocation to non-controlling interests in the current quarter, which increased by 52%. It’s also worth noting that the pre-tax profit for the quarter included a net negative impact of RM2.269 million from fair value losses on foreign exchange derivatives and exchange translation losses on an investment in Compulsory Convertible Debentures (CCD).

Segmental Performance: The Engines of Growth

METROD’s operations are divided into two key segments:

Copper Business

The Copper business continues to be a major revenue contributor, with external revenue reaching RM1,482.8 million in Q1 2025, up from RM1,288.0 million in Q1 2024. This improvement is primarily due to higher sales volumes, reflecting a better performance across key economic sectors and a 4.4% GDP expansion in Malaysia during the quarter. The Group’s focus on enhancing service quality and customer engagement has allowed them to strengthen their position in Malaysia and other key markets.

Despite the revenue growth, the segment’s results saw a slight dip to RM10.3 million from RM10.4 million in the corresponding quarter last year. This highlights the ongoing pressure from high US dollar interest rates, rising energy costs, and geopolitical uncertainties, which continue to impact costs and supply chain stability. Intense competition from overcapacity also remains a challenge.

Hospitality Business

The Hospitality business delivered an exceptional performance, with external revenue rising to RM41.8 million in Q1 2025, compared to RM40.3 million in Q1 2024. Segment results significantly improved to RM17.8 million from RM14.4 million in Q1 2024. This impressive growth was fueled by approximately 6% higher average room rates, a direct benefit of product upgrades and renovations completed for normal category rooms. This segment truly shines as a testament to strategic investment in asset enhancement.

Financial Health: Balance Sheet and Borrowings

As of 31 March 2025, METROD’s net assets stood at RM2,109.3 million, an increase from RM1,828.2 million in Q1 2024. However, total borrowings also saw an increase to RM1,330.2 million from RM1,022.4 million in the previous year’s corresponding quarter. This rise is primarily attributed to increased working capital requirements, necessitated by higher London Metal Exchange (LME) copper prices and the overall higher sales volumes in the Copper business. The Group is actively optimizing its working capital cycle and collaborating with banks to secure additional financing.

Capital commitments for property, plant, and equipment not yet provided for in the interim financial statements amount to RM67.9 million, indicating planned future investments in growth and infrastructure.

Navigating the Headwinds: Risks and Prospects

While METROD’s Q1 2025 results show a positive trend, the management has clearly outlined several external factors that could influence future performance. The global economic environment remains complex, and the company is actively implementing strategies to mitigate potential risks and capitalize on opportunities.

Challenges Ahead:

• Global Trade Uncertainty: The rapidly evolving situation surrounding reciprocal trade tariffs initiated by the US is expected to affect the global outlook, potentially introducing new trade restrictions and non-tariff barriers in some markets.
• Economic Pressures: High US dollar interest rates continue to result in elevated financing costs, with no rate cuts observed so far. Rising energy prices also add to business challenges.
• Geopolitical Instability: Ongoing geopolitical uncertainties in Europe and the Middle East, along with drawn-out situations in certain regions, continue to exert pressure on supply chain stability and logistics costs. Shipping delays remain a concern.
• Copper Market Volatility: Volatile LME copper prices contribute to high credit, commercial, and security risks, increasing working capital funding requirements.
• Operational Interruptions: A massive blaze at a Petronas gas pipeline in April 2025 temporarily halted the main copper casting plant, leading to production loss and higher gas costs, though an alternate source has been secured.
• Chinese Economy: The Chinese economy continues to face various challenges, which could impact regional demand.
• Hospitality Renovations: While beneficial long-term, ongoing renovations of higher category suites will temporarily impact the hotel’s performance, with full inventory expected back by year-end.
• Litigation: The Group is facing ongoing Countervailing Duty (CVD) demands in India, although legal counsel opines a strong case on merits and a remote likelihood of an unfavorable decision.

Strategic Responses and Outlook:

Despite these formidable challenges, METROD is not standing still. The Group remains committed to optimizing costs, improving operational efficiencies, and strengthening internal processes. For the Copper business, the focus is on expanding geographic reach and improving market share, supported by expected continued investment in infrastructure and renewable energy projects in key export markets.

In the Hospitality segment, the current renovations are a strategic move to enhance future revenue generation, especially during peak seasons once the upgraded suites are back in inventory. The Group’s robust internal systems and hedging policies are crucial in managing risks associated with volatile copper prices and currency fluctuations.

What are your thoughts on METROD’s Q1 2025 performance? Do you believe their strategies are sufficient to overcome the ongoing global challenges and sustain growth? Share your insights in the comments below!