APM Automotive: Navigating Q1 2025 Amidst Shifting Tides – A Deeper Dive into Their Latest Report
Greetings, fellow investors and automotive enthusiasts! Today, we’re taking a closer look at the latest financial heartbeat of APM Automotive Holdings Berhad, a familiar name in Malaysia’s automotive and mobility components sector. Their First Quarter 2025 report, ending March 31, 2025, has just landed, and it offers a fascinating snapshot of a company navigating a dynamic market environment. While the top line shows a modest increase, the journey to profitability reveals some interesting twists and turns. Let’s unbox the key figures and understand what’s driving APM’s performance and what lies ahead.
Core Data Highlights: A Mixed Bag of Growth and Challenges
APM Automotive managed to increase its revenue, a positive sign, but faced headwinds that impacted its bottom line. Here’s a breakdown of the crucial numbers for Q1 2025 compared to the corresponding quarter last year:
Revenue & Profitability Overview
Q1 2025
Revenue: RM499.7 million
Profit Before Tax (PBT): RM34.1 million
Profit for the Period: RM25.4 million
Basic Earnings Per Share: 9.52 sen
Q1 2024
Revenue: RM490.4 million
Profit Before Tax (PBT): RM35.8 million
Profit for the Period: RM27.8 million
Basic Earnings Per Share: 10.34 sen
While revenue saw a slight increase of 1.9%, driven by the commencement of supply for new models launched in Malaysia since Q2 2024, the Profit Before Tax (PBT) actually dipped by 4.8%. This seemingly counterintuitive trend can be attributed to two main factors:
- Higher Finance Costs: Finance costs more than doubled, increasing by a significant 105.7% from RM2.2 million to RM4.6 million. This was largely due to additional Islamic Medium-Term Notes (IMTN) issued in Q2 2024.
- Lower Share of Profit from Associates & Joint Ventures: The contribution from equity-accounted associates and joint ventures saw a notable decline of 35.0%, from RM4.0 million to RM2.6 million.
Consequently, the profit for the period decreased by 8.7%, and basic earnings per share followed suit, dropping by 7.9%.
Segmental Performance Analysis
Delving deeper, the report provides insights into how each business segment performed:
| Segment | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Revenue Change (%) | Q1 2025 PBT (RM’000) | Q1 2024 PBT (RM’000) | PBT Change (%) | Key Driver/Commentary |
|---|---|---|---|---|---|---|---|
| Suspension Division | 48,979 | 58,453 | -16.2% | (1,086) (Loss) | 1,639 (Profit) | -166.3% | Softening local OEM market, unfavourable sales mix. |
| Interior & Plastics Division | 393,736 | 379,213 | +3.8% | 33,750 | 34,671 | -2.7% | New OEM models supply, but Q1 2024 had recovery of development expenditures. |
| Electrical & Heat Exchange Division | 33,554 | 37,336 | -10.1% | 605 | 383 | +57.9% | Lower OEM call-ins, but improved PBT due to price adjustment and claims. |
| Marketing Division | 68,087 | 68,671 | -0.9% | 1,346 | 1,831 | -26.5% | Marginally lower revenue, PBT affected by higher unrealized foreign exchange gains in Q1 2024. |
| Indonesia Operations | 23,004 | 21,919 | +5.0% | 1,926 | 1,060 | +81.7% | Start of supply to new OEM customer, write-back of provisions. |
| All Other Segments | 39,620 | 39,371 | +0.6% | (1,193) (Loss) | (2,413) (Loss) | +50.6% | Flat revenue, but reduced loss due to gain from disposal of production line in Thailand. |
The Interior & Plastics division remains the largest contributor to revenue, showing growth, though its profitability was slightly tempered. Indonesia operations showed promising growth in both revenue and PBT, boosted by new OEM customers and inventory adjustments. Other segments saw mixed results, with some improving profitability despite revenue challenges.
Quarter-on-Quarter (QoQ) Performance (Q1 2025 vs Q4 2024)
Comparing Q1 2025 to the preceding quarter (Q4 2024) reveals a broader slowdown:
Q1 2025
Group Revenue: RM499.7 million
Group PBT: RM34.1 million
Q4 2024
Group Revenue: RM590.0 million
Group PBT: RM54.6 million
Overall group revenue decreased by 15.3% quarter-on-quarter, primarily due to a slowdown in the local OEM segment in Malaysia after a record Total Industry Volume (TIV) in 2024. This also led to a significant 37.7% drop in group PBT, with the Interior & Plastics, Electrical & Heat Exchange, and Marketing divisions all reporting lower PBT contributions compared to Q4 2024, often influenced by one-off gains in the previous quarter.
Financial Health & Cash Flow
APM’s financial standing remains robust. As of March 31, 2025, the Group maintained a healthy shareholders’ fund of RM1.5 billion and a net cash position of RM284.2 million. The current ratio, a key indicator of liquidity (Current Assets / Current Liabilities), improved from 2.52 times at the end of 2024 to 2.62 times, primarily driven by faster inventory turnover and a reduction in trade and other payables.
However, net assets per share slightly decreased from RM7.36 to RM7.24. This was mainly due to dividend payments totaling RM35.2 million to shareholders and RM10.0 million to non-controlling interests. Additionally, the strengthening of the Malaysian Ringgit led to unfavourable foreign currency translation effects on overseas subsidiaries, associates, and joint ventures.
Despite a net decrease in cash and cash equivalents of RM29.6 million during the quarter, the Group generated a positive net cash from operating activities of RM29.1 million, a significant improvement from a negative cash flow in the corresponding period last year. This was offset by cash used in financing activities, predominantly for dividend payments and loan repayments.
Risks and Prospects: Navigating a Complex Landscape
APM Automotive operates within a dynamic global and local environment, facing both opportunities and challenges:
Industry Trends & Challenges
- Malaysian Automotive Market: After a record-breaking 2024, Malaysia’s TIV and Total Industry Production (TIP) declined in Q1 2025 by 7% and 16% respectively. This moderation is expected to continue for the remainder of 2025, primarily due to shrinking order backlogs and the increasing share of electric vehicle sales, which are predominantly imported as Completely Built-Up (CBU) units. However, demand for A-segment passenger vehicles is anticipated to remain stable.
- Aftermarket (REM) & Export Segments: While these segments remained relatively stable in Q1 2025, uncertainties persist. The domestic REM segment faces intense competition from imported goods, while the Export segment continues to focus on strengthening its presence in key international markets like the United States, Australia, and Europe.
- Overseas Operations: Operations in Indonesia are challenged by declining vehicle sales and tariff-related uncertainties. However, the entry of new Chinese carmakers could present fresh growth opportunities.
- Geopolitical Tensions: The global economic landscape remains fraught with elevated geopolitical tensions, which could lead to renewed financial market volatility and wider disruptions to economic activity.
Strategic Responses & Outlook
In response to these challenges, APM Automotive is adopting a prudent and cautious approach in managing its operations. The Group remains committed to its five-year strategic plan, which aims to bolster long-term business sustainability and consistently deliver value to shareholders. This includes continued investment in tooling, machinery, and development costs for new vehicle models and production facilities, funded internally and through bank borrowings.
The Group’s strong liquidity position, with substantial unutilized Islamic Medium-Term Notes (IMTN) of up to RM1.25 billion, provides a significant buffer and flexibility for future capital investments, ensuring it can seize growth opportunities as they arise.
Summary and
APM Automotive’s First Quarter 2025 report paints a picture of resilience amidst a challenging automotive landscape. While revenue saw a modest increase, profitability was impacted by higher finance costs and reduced contributions from associates and joint ventures. The slowdown in Malaysia’s OEM segment is a key factor, but the Group’s efforts in other divisions and overseas markets, coupled with strategic cost management and claims, helped mitigate some of these pressures.
Key takeaways from this report include:
- Revenue Growth Despite Headwinds: A slight increase in revenue indicates the company’s ability to secure new businesses, particularly with new OEM models.
- Profitability Squeeze: Higher finance costs and lower associate contributions put pressure on the bottom line, leading to a dip in PBT and EPS.
- Strong Financial Health: A robust balance sheet, improving current ratio, and healthy net cash position underscore the company’s financial stability.
- Strategic Adaptability: APM is actively addressing market challenges through prudent management and a clear five-year strategic plan, focusing on long-term sustainability and shareholder value.
- Dividend Payout: The payment of a higher interim dividend of 18.0 sen per share (compared to 11.0 sen last year) reflects the company’s commitment to returning value to shareholders, despite the quarter’s lower profit.
The automotive industry in Malaysia is expected to moderate after a record year, and global geopolitical tensions add layers of uncertainty. However, APM’s diversified customer base, broad product portfolio, and strategic focus on international markets and new growth opportunities (like the potential from new Chinese carmakers in Indonesia) position it to navigate these complexities.
From a professional standpoint, APM’s ability to increase revenue in a moderating market, coupled with its strong financial health and strategic long-term vision, suggests a company that is well-prepared to face future challenges. The increase in finance costs is a direct result of capital structure decisions, and the decline in associate contributions warrants closer monitoring, but the operational cash flow improvement is a positive sign.
What are your thoughts on APM Automotive’s Q1 2025 performance? Do you believe the company can maintain its operational improvements and navigate the expected moderation in the Malaysian automotive market effectively? Share your perspectives in the comments section below!
