KPS Berhad’s 1Q25: Navigating Headwinds with Operational Resilience and a Return to Profitability
Greetings, fellow investors and market watchers! Today, we’re diving deep into the latest financial report from Kumpulan Perangsang Selangor Berhad (“KPS Berhad”), covering their first quarter ended 31 March 2025 (1Q25). In an environment still grappling with global economic shifts and elevated costs, KPS Berhad has demonstrated remarkable operational resilience, posting a higher revenue and, more impressively, a significant turnaround in its profitability. This report offers a compelling narrative of strategic adaptation and growth in key segments, painting a picture of a company actively charting its path forward. Let’s explore the numbers and the story behind them.
Core Data Highlights: A Closer Look at the Numbers
KPS Berhad reported a robust financial performance for 1Q25, showcasing growth in revenue and a significant rebound in profitability. The Group’s strategic focus on its manufacturing segment, particularly new project wins, has been instrumental in this quarter’s success.
Group Financial Performance: A Positive Turnaround
Despite a complex operating environment characterised by slower demand recovery and elevated input costs, KPS Berhad delivered a steady increase in overall revenue and a notable improvement in profit after tax.
1Q25
Revenue: RM243.5 million
Operating Profit: RM13.7 million
Profit After Tax (PAT): RM8.2 million (Profit)
1Q24
Revenue: RM233.8 million
Operating Profit: RM8.0 million
Profit After Tax (PAT): RM6.0 million (Loss)
The Group’s revenue saw a modest increase of approximately 4.15%, rising from RM233.8 million in 1Q24 to RM243.5 million in 1Q25. More significantly, operating profit almost doubled, soaring to RM13.7 million from RM8.0 million in the previous corresponding quarter. This impressive growth was primarily driven by stronger contributions from its manufacturing business. The most striking highlight is the Group’s return to profitability, posting a PAT of RM8.2 million, a significant turnaround from a loss position of RM6.0 million in 1Q24.
Business Unit Performance: Mixed Fortunes, Strategic Wins
The manufacturing business, comprising Toyoplas, CPI, MDS Advance, and CBB, continues to be the backbone of KPS Berhad, contributing 83.8% to the Group’s revenue. This segment collectively posted RM204.1 million in revenue for 1Q25, up from RM192.6 million in 1Q24.
Manufacturing Segment Breakdown:
- Toyoplas Manufacturing (Malaysia) Sdn Bhd: A standout performer, Toyoplas registered a remarkable 43.1% topline growth, contributing RM100.6 million compared to RM70.3 million in 1Q24. This surge was primarily due to stronger sales from Malaysia and China operations, driven by new assembly projects in consumer electronics and multimedia & communication segments secured last year.
- MDS Advance Sdn Bhd: Signalling a recovery, MDS Advance saw its revenue grow by 23.8% to RM5.2 million, backed by a stronger performance in its medical division.
- CPI: Delivered a level performance with RM52.8 million in revenue. The engineering thermoplastics (ETP) segment faced pressure from softer demand and delayed product launches across most business segments, except electronics.
- Century Bond Bhd (CBB): Faced significant headwinds, with its revenue sliding by 29.7% to RM45.5 million. This decline was attributed to slower market demand and intense competition across all its business divisions.
Trading Business: Steady Contribution
The trading business, represented by Aqua-Flo Sdn Bhd, contributed a further RM39.4 million to the Group’s revenue. This was supported by higher equipment sales and consistent traction from water chemicals, water meters, and miscellaneous sales.
Financial Health: Improved Efficiency and Lower Costs
The Group’s improved profitability was also bolstered by better cost management and reduced finance costs:
1Q25
Other Income: RM8.0 million
Other Expenses: RM36.2 million
Finance Costs: RM2.3 million
1Q24
Other Income: RM10.7 million
Other Expenses: RM41.8 million
Finance Costs: RM6.3 million
While other income eased to RM8.0 million (from RM10.7 million) due to lower interest income and foreign exchange gains, other expenses significantly eased to RM36.2 million (from RM41.8 million). This reduction was largely due to restructuring exercises in Toyoplas and a shift in CBB’s carton business model last year. Furthermore, finance costs were substantially trimmed to RM2.3 million from RM6.3 million in 1Q24, following the repayment of the SUKUK, further boosting the bottom line.
Risk and Prospect Analysis: Navigating a Dynamic Landscape
KPS Berhad acknowledges the ongoing complexities in the global operating environment, particularly the impact of shifts in U.S. trade policy which have fragmented supply chains and intensified pressure on growth momentum. However, the Group is not merely reacting but proactively implementing strategies to address these challenges and seize opportunities.
Key Challenges Identified:
- Geopolitical and Macroeconomic Headwinds: The global economic landscape remains uncertain, with US trade policies and slower demand recovery impacting overall consumer sentiment and business activities.
- Elevated Input Costs: Continuing high input costs put pressure on profit margins, especially in segments facing intense price competition like CBB.
- Demand Volatility and Competition: Certain business units, such as CBB, are experiencing lower offtake, demand volatility, and increased price competition.
Strategic Responses and Outlook:
The Group’s Managing Director/Group CEO highlighted the resilience and adaptability demonstrated in 1Q25, particularly within the manufacturing segment. KPS Berhad is committed to ensuring strategic and operational agility, as well as financial stability.
- Operational Streamlining: Ongoing consolidation exercises and business rationalisation activities, such as those undertaken in CBB, are aimed at streamlining production planning and restoring competitiveness for long-term profitability.
- Customer Base Expansion: The Group is stepping up sales development efforts to expand its customer base and diversify revenue streams across key markets. The success in securing new clients in 1Q25 validates these strategic decisions.
- Enhanced Manufacturing Capabilities: Capital expenditure will be allocated to enhance manufacturing capacity and capabilities, ensuring operational readiness to meet evolving customer demands and scale future growth.
- Product Mix and Pricing Review: KPS Berhad is actively reviewing its product mix to prioritise higher-margin offerings and exploring price adjustments where practicable. These actions are crucial for capturing growth opportunities and sustainable value creation.
The Group’s focus remains on building a stronger, more resilient business through targeted strategic initiatives, reflecting a commitment to operational discipline and strategic agility in the quarters ahead.
Summary and
KPS Berhad’s 1Q25 results present a compelling picture of a company demonstrating strong operational resilience and strategic adaptability amidst a challenging global economic backdrop. The significant turnaround from a loss to a profit position, driven by robust performance in key manufacturing segments like Toyoplas and MDS Advance, underscores the effectiveness of its strategic initiatives. While some segments like CBB face headwinds, the Group’s proactive measures in streamlining operations, expanding its customer base, and enhancing manufacturing capabilities position it for sustained growth.
Key positive factors from this financial report include:
- Return to profitability: A significant turnaround in PAT from a loss to a profit.
- Strong manufacturing segment growth: Toyoplas and MDS Advance showing impressive revenue increases from new projects.
- Improved cost management: Reduced other expenses and finance costs contributing to the bottom line.
- Strategic foresight: Proactive measures to navigate geopolitical challenges and market shifts.
Looking ahead, KPS Berhad’s commitment to strategic agility, operational discipline, and continuous improvement suggests a positive outlook for its future development. The focus on expanding customer bases, diversifying revenue streams, and investing in manufacturing capabilities indicates a clear path towards sustainable value creation.
From a professional standpoint, KPS Berhad’s 1Q25 report showcases a management team that is not only aware of the external pressures but is actively implementing tangible strategies to mitigate risks and capitalise on opportunities. The ability to pivot and find growth in specific niches, as seen with Toyoplas’s new projects, speaks volumes about their business development capabilities. While the mixed performance across subsidiaries highlights the uneven recovery across industries, the overall positive trajectory and the strategic focus on higher-margin offerings are encouraging.
Do you think KPS Berhad can maintain this growth momentum and continue to successfully navigate the complex global landscape in the coming quarters? Share your thoughts in the comment section below!
