Greetings, fellow investors and market watchers! Today, we’re diving deep into the latest financial performance of **WARISAN TC HOLDINGS BERHAD** for the quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s operational health and strategic direction amidst a dynamic economic landscape.
While the Group saw a marginal uptick in revenue, the headline figure reveals a significant widening of losses, prompting a closer look at the underlying factors. The company’s strategic initiatives, particularly in its Automotive segment, are in full swing, but their impact on the bottom line is still evolving. Let’s unpack the numbers and understand what this means for Warisan TC Holdings.
Q1 2025 Performance: A Mixed Bag
Warisan TC Holdings Berhad recorded a slight increase in revenue for the first quarter of 2025, reaching RM116.4 million, a 1% rise compared to RM115.2 million in the same period last year. This growth was primarily fueled by the Automotive segment. However, despite the revenue growth, the Group’s profitability faced headwinds, resulting in a substantial increase in losses.
Q1 2025 Highlights
- Revenue: RM116,377,000
- Gross Profit: RM24,188,000
- Loss Before Tax: RM(8,437,000)
- Loss for the Period: RM(10,048,000)
- Loss Attributable to Owners: RM(10,249,000)
- Basic Loss Per Share: (15.74) sen
Q1 2024 Comparison
- Revenue: RM115,247,000
- Gross Profit: RM28,810,000
- Loss Before Tax: RM(2,248,000)
- Loss for the Period: RM(3,486,000)
- Loss Attributable to Owners: RM(3,456,000)
- Basic Loss Per Share: (5.31) sen
The consolidated loss before tax significantly widened by 275% to RM8.4 million, from RM2.2 million in the corresponding period a year ago. This deterioration was mainly attributed to higher operating costs incurred by WTC Automotif (M) Sdn Bhd (WTCA) and an increased share of losses from the Group’s jointly controlled entities.
Segmental Deep Dive
Understanding the individual performance of each business unit provides a clearer picture of the Group’s challenges and opportunities:
Automotive Segment: Growth in Sales, Widening Losses
The Automotive segment saw revenue increase to RM47.8 million, up from RM43.8 million in the previous year. This growth was primarily driven by higher sales volumes from WTCA, following the official launch of the new GAC model and the commencement of its CKD program in Q2 2024. However, this positive revenue trend was partially offset by lower sales of heavy commercial vehicles due to delays in approval from the Road Transport Department (JPJ).
Despite the revenue growth, the segment’s pre-tax losses widened to RM6.3 million, from RM2.1 million in the same period last year. This was a result of strategic increases in WTCA’s marketing spend, brand-building efforts, loyalty programs, and market expansion initiatives, which are investments for future growth.
Machinery Segment: Deferred Deliveries, Marginal Profit Rise
Revenue for the Machinery segment declined to RM38.4 million from RM40.2 million. The report indicates that the quarter was a shorter operating period due to festive seasons, causing fleet deliveries to be deferred to Q2 2025. Despite the lower revenue, the segment’s profit before tax marginally rose by RM0.3 million, increasing from RM0.8 million to RM1.1 million, indicating improved efficiency or cost management within the segment.
Travel and Car Rental Segment: Stable Revenue, Reduced Profitability
Amidst modest global air passenger traffic growth, the Travel and Car Rental segment maintained a stable revenue performance at RM27.8 million, compared to RM28.2 million in the prior year. To strengthen its competitive position, the segment strategically increased backend incentives sharing with business partners. While this approach successfully sustained top-line performance and market share, it led to a temporary compression of profitability, with profit before tax decreasing to RM0.5 million, from RM3.1 million in the corresponding period last year.
Jointly Controlled Entities: Widening Losses
The Group’s joint venture entities, Shiseido Malaysia Sdn Bhd and Wacoal Malaysia Sdn Bhd, recorded a net loss after tax of RM1.1 million, compared to RM0.9 million in the same period last year. This weaker performance was primarily due to lower sales by Shiseido, driven by softer consumer demand in the beauty and personal care segment and intensified competition within the premium skincare market.
Comparison with Immediate Preceding Quarter (Q1 2025 vs Q4 2024)
When compared to the immediate preceding quarter (Q4 2024), Warisan TC Holdings’ revenue increased by 5% to RM116.4 million, primarily driven by Angka-Tan Motor Sdn Bhd’s (ATM) bulk sales of light commercial vehicles. However, the loss before tax expanded significantly to RM8.4 million from RM0.4 million in the previous quarter. This was mainly due to higher operating costs and an increased share of losses from Shiseido, contrasting with a profit sharing in the preceding quarter.
Financial Health and Cash Flow
The Group’s financial position saw some shifts. Total assets increased to RM857.7 million as at 31 March 2025, up from RM844.9 million at 31 December 2024. However, total liabilities also rose to RM616.8 million from RM591.0 million, leading to a decrease in total equity to RM240.9 million from RM253.9 million. Consequently, net assets per share attributable to owners of the company declined to RM3.38 from RM3.58.
From a cash flow perspective, the Group utilized RM15.1 million in operating activities for Q1 2025, a notable improvement from the RM55.9 million used in the same period last year. This suggests better management of working capital, although cash and cash equivalents still saw a decrease to RM54.5 million from RM65.7 million at the beginning of the year. Total borrowings stood at RM303.4 million as at 31 March 2025, an increase from RM285.5 million in the prior year’s corresponding period, indicating increased reliance on debt.
Risks and Prospects: Navigating a Dynamic Environment
The Malaysian economy recorded strong growth of 5.1% in 2024, driven by resilient domestic demand and a rebound in exports. Looking ahead, economic activity is expected to remain robust in 2025, underpinned by domestic demand. Household spending is anticipated to be supported by employment and wage growth, alongside policy measures like the upward revision of the minimum wage and civil servant salaries. Investment activity is also expected to remain strong, sustained by multi-year projects and national master plans.
However, external uncertainties stemming from ongoing geopolitical tensions and recent tariff wars pose potential risks. Despite these challenges, Warisan TC Holdings is proactively strengthening its market position:
- **Automotive Expansion:** Building on the successful 2024 launches of the GAC Emzoom and AION models, the Group has further strengthened its portfolio with the all-electric AION ES and Foton Euro 5 commercial vehicles. These new offerings combine competitive pricing with expanded choices, reinforcing their market position. The Group plans to introduce a series of new models in 2025 to attract broader customer demographics.
- **Enhanced Value Proposition:** Complementing new launches, the Group is enhancing its value proposition through comprehensive after-sales services, a key differentiator for customer attraction and retention.
- **Strategic Focus:** The Group’s strategic focus will center on expanding market share across segments, elevating brand awareness for passenger vehicles, and maintaining innovation leadership.
- **Operational Efficiency:** The Group remains dedicated to improving performance by leveraging the recovery and expansion of the Travel segment, while also growing the scale and output of the Machinery and Automotive segments. Concurrently, it is focused on boosting operational efficiency and responding swiftly to changes in the business environment, especially in light of strong competition from other brands.
The company emphasizes that staying alert, flexible, and decisive will be essential to driving continued growth and profitability.
Summary and Outlook
Warisan TC Holdings’ Q1 2025 report presents a mixed picture. While revenue saw a modest increase, largely driven by the Automotive segment, profitability was significantly impacted by higher operating costs and losses from joint ventures. The strategic investments in brand building and market expansion for the Automotive segment, while contributing to current losses, are aimed at securing future growth.
The Group faces a challenging environment marked by intense competition and external uncertainties. However, it is actively implementing strategies to expand market share, enhance its product portfolio with new models, and improve operational efficiency across its diverse segments. The slight improvement in cash flow from operations is a positive sign, indicating better working capital management.
The company’s commitment to new product launches, strengthened after-sales services, and a focus on operational agility suggests a forward-looking approach. While the path to profitability might be challenging in the short term, these strategic moves are designed to position Warisan TC Holdings for sustainable growth in the long run.
Key areas to watch going forward include:
- The successful execution and market reception of new automotive models.
- The effectiveness of increased marketing spend in the Automotive segment in driving future sales and market share.
- The ability of the Travel and Car Rental segment to recover profitability while maintaining market share.
- The performance of jointly controlled entities, particularly Shiseido, amidst competitive pressures.
- The Group’s overall ability to manage operating costs and improve efficiency across all segments.
From a professional standpoint, Warisan TC Holdings is clearly in an investment phase, particularly within its Automotive division, aiming to capture new market share with fresh models. This often entails higher upfront costs and can weigh on short-term profitability, as evidenced in this quarter’s results. The challenge will be to translate these investments into sustainable revenue and profit growth in subsequent quarters, especially as the Malaysian economy continues its robust domestic demand. The improved cash flow from operations, despite the overall loss, is a subtle but important indicator of operational discipline.
What are your thoughts on Warisan TC Holdings’ Q1 2025 performance? Do you believe their strategic investments will pay off in the long run, or are the widening losses a cause for concern? Share your views in the comments section below!
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