Greetings, fellow investors and market watchers!
Today, we’re diving into the latest financial pulse of Timberwell Berhad, a name synonymous with forest management and timber in Malaysia. The company has just released its interim report for the period ended 31 March 2025, offering a glimpse into its performance amidst a dynamic market. While the report highlights an improved bottom line compared to the same period last year, it also underscores persistent challenges, particularly on the revenue front. Let’s unpack the key figures and strategic insights that caught our attention, providing a clearer picture of Timberwell’s current standing and future trajectory.
Timberwell Berhad: Q1 2025 Performance Highlights
The first quarter of 2025 presented a mixed bag for Timberwell Berhad. While the company managed to significantly reduce its losses, revenue saw a notable decline, primarily influenced by operational factors. Here’s a closer look at the core financial data:
Financial Performance Overview
Revenue (RM’000)
Q1 2025: 1,715
A 45.26% decrease.
Revenue (RM’000)
Q1 2024: 3,133
Same period last year.
Timberwell reported a revenue of RM1.715 million for the first quarter of 2025, a substantial drop compared to RM3.133 million in the corresponding quarter of 2024. The company attributed this decline primarily to adverse weather conditions and lower production output during the current quarter.
Loss Before Tax (RM’000)
Q1 2025: (421)
A 35.63% improvement.
Loss Before Tax (RM’000)
Q1 2024: (654)
Same period last year.
Despite the revenue challenge, Timberwell managed to narrow its pre-tax loss to RM0.421 million in Q1 2025, a significant improvement from the RM0.654 million loss recorded in the same period last year. This indicates effective cost management or other income contributions that helped cushion the impact of reduced sales.
Loss Attributable to Ordinary Equity Holders (RM’000)
Q1 2025: (402)
A 35.58% improvement.
Loss Attributable to Ordinary Equity Holders (RM’000)
Q1 2024: (624)
Same period last year.
The net loss attributable to ordinary equity holders also saw a positive shift, reducing to RM0.402 million from RM0.624 million in the corresponding quarter. This directly impacts shareholder value.
Basic Loss Per Share (sen)
Q1 2025: (0.45)
A 35.71% improvement.
Basic Loss Per Share (sen)
Q1 2024: (0.70)
Same period last year.
Consequently, the basic loss per share improved to 0.45 sen from 0.70 sen, reflecting the reduced overall loss for the period.
Comparison to Immediate Preceding Quarter
When comparing the current quarter (Q1 2025) to the immediate preceding quarter (Q4 2024), Timberwell’s loss improved from RM0.6 million to RM0.4 million. This positive shift was mainly attributed to the recognition of a fair value loss on the valuation of Biological Assets in the previous quarter, which did not recur in Q1 2025.
Financial Health and Cash Flow
As of 31 March 2025, the company’s net assets per share attributable to ordinary equity holders stood at RM0.6821, a slight decrease from RM0.6839 at the end of the financial year 2024. This marginal change suggests a relatively stable financial position despite the quarterly fluctuations.
Net Cash From Operating Activities (RM’000)
Q1 2025: 1,111
A significant turnaround.
Net Cash From Operating Activities (RM’000)
Q1 2024: (319)
Same period last year.
A notable highlight from the cash flow statement is the substantial improvement in net cash from operating activities, which turned positive at RM1.111 million for Q1 2025, compared to a negative RM0.319 million in Q1 2024. This indicates better operational cash generation, which is crucial for the company’s liquidity and sustainability.
Risks and Future Prospects
Timberwell Berhad operates in an industry susceptible to various external factors. The company acknowledges that the global timber market is expected to remain challenging. In response, it has adopted necessary strategies and approaches to navigate this volatile environment.
One inherent characteristic of the timber industry is its seasonality, particularly concerning timber log harvesting operations, which can be severely affected by prevailing weather conditions. This explains some of the revenue challenges faced in the current quarter.
The report also touched upon the revaluation exercises for Property, Plant, and Equipment (PPE) and Biological Assets (which are essentially the planted trees). While the PPE revaluation conducted in Q4 2024 resulted in a slight increase in net assets per share, the revaluation of Biological Assets led to a revaluation deficit, decreasing net assets per share. This highlights the ongoing efforts by the company to reflect fair values of its assets in compliance with accounting standards, and investors should be aware of the impact of such valuations on reported figures.
The company holds a long-term sustainable forest management license, with plans to enhance its production capacity through an increased Industrial Tree Plantation (ITP) area. This long-term strategy aims to bolster future timber supply, which could be a significant growth driver once the planted trees mature.
Dividends
For the financial quarter ended 31 March 2025, no dividend has been proposed or declared.
Summary and Outlook
Timberwell Berhad’s Q1 2025 report paints a picture of a company actively managing its challenges. While revenue dipped due to weather and lower production, the significant reduction in losses and the strong positive shift in cash flow from operations are encouraging signs. The company continues to navigate a challenging global timber market, focusing on long-term strategies like expanding its industrial tree plantation area to secure future growth.
Key points from the report:
- Losses significantly narrowed compared to the same period last year.
- Revenue faced headwinds due to weather and production issues.
- Operational cash flow turned positive, indicating improved liquidity.
- The company is adapting strategies to the volatile global timber market.
- Long-term prospects are tied to the expansion of its Industrial Tree Plantation.
Despite the immediate revenue pressures, the improved profitability and cash flow generation suggest that Timberwell Berhad is taking steps to strengthen its financial resilience. The long-term sustainable forest management initiatives also position the company for future growth, albeit with the inherent risks of the timber industry.
From a retail investor’s perspective, this report underscores the importance of looking beyond just the top-line revenue. The ability to control costs and generate positive cash flow, even in a difficult environment, speaks volumes about operational efficiency. The long-term commitment to sustainable forest management and expanding planted areas could unlock significant value in the future, but it also means patience is key as these are long-cycle investments.
Do you think Timberwell Berhad can maintain this positive trend in loss reduction and cash flow generation, even if revenue continues to be challenging? Share your thoughts in the comments below!
