Oriental Food Industries: A Mixed Bag of Growth and Challenges in FY2025
Greetings, fellow investors and food industry enthusiasts! Today, we’re diving into the latest financial report from Oriental Food Industries Holdings Berhad (OFIH), a household name in Malaysia’s snack and confectionery scene. Their unaudited interim financial statements for the financial year ended 31 March 2025 offer a fascinating glimpse into their performance, revealing a story of solid revenue growth coupled with a dip in profitability, all while navigating a dynamic global market. What’s truly impressive is their continued commitment to shareholder returns, highlighted by a significant dividend announcement.
Let’s break down the numbers and see what’s cooking at OFIH!
Full-Year Performance: Revenue Up, Profits Down
OFIH’s full financial year (FY2025) performance, ending March 31, 2025, shows a robust top-line expansion but a noticeable contraction in the bottom line. The Group’s revenue saw a healthy increase, primarily driven by stronger sales in both local and export markets. However, foreign exchange losses and higher administrative expenses weighed on their profitability.
FY2025 (Period To-Date)
Revenue: RM457.11 million
Operating Profit: RM51.92 million
Profit Before Tax (PBT): RM51.84 million
Profit After Tax (PAT): RM38.89 million
Earnings Per Share (EPS): 16.20 sen
FY2024 (Corresponding Period)
Revenue: RM431.72 million
Operating Profit: RM55.76 million
Profit Before Tax (PBT): RM55.62 million
Profit After Tax (PAT): RM43.29 million
Earnings Per Share (EPS): 18.04 sen
This translates to a 5.88% increase in revenue, a positive sign of market demand for their products. However, Operating Profit, PBT, PAT, and EPS all saw declines of approximately 6.89%, 6.80%, 10.18%, and 10.18% respectively. The impact of foreign exchange losses and increased administrative costs is clearly visible here.
Quarterly Snapshot: A Dip from the Previous Quarter
Looking at the most recent quarter (Q4 FY2025) compared to the immediate preceding quarter (Q3 FY2025), OFIH experienced a slight slowdown. Revenue saw a modest decrease, primarily due to lower local sales. This also contributed to a decline in profitability for the quarter.
Q4 FY2025
Revenue: RM106.67 million
Operating Profit: RM13.69 million
Profit Before Tax (PBT): RM13.67 million
Profit After Tax (PAT): RM10.35 million
Earnings Per Share (EPS): 4.31 sen
Q3 FY2025
Revenue: RM111.51 million
Operating Profit: RM17.09 million
Profit Before Tax (PBT): RM17.07 million
Profit After Tax (PAT): RM12.53 million
Earnings Per Share (EPS): 5.22 sen
Revenue for Q4 FY2025 was 4.33% lower than Q3 FY2025, and PBT saw a nearly 20% reduction. Again, foreign exchange losses were cited as a primary factor for the lower profit.
Segmental & Geographical Performance
The Group’s core business, manufacturing and marketing of snack food and confectioneries, remains the dominant segment, accounting for the entire external revenue. While this segment’s profit dipped slightly from RM56.04 million in FY2024 to RM52.25 million in FY2025, it continues to be the backbone of OFIH’s operations.
Geographically, OFIH continues to diversify its reach. While Asia remains its largest market, Malaysia’s contribution is steadily growing.
| Region | FY2025 Revenue (RM’000) | FY2025 % | FY2024 Revenue (RM’000) | FY2024 % |
|---|---|---|---|---|
| Malaysia | 169,074 | 37% | 150,702 | 35% |
| Asia | 220,860 | 48% | 223,046 | 52% |
| Others | 67,175 | 15% | 57,975 | 13% |
| Total | 457,109 | 100% | 431,723 | 100% |
The increase in Malaysia’s contribution from 35% to 37% is a positive sign of strengthening domestic presence, while the slight dip in Asia’s percentage might indicate a strategic shift or increased competition in that region.
Financial Health: Prudent Management of Borrowings
OFIH’s financial position appears solid, with a notable reduction in total borrowings. This indicates prudent financial management and a healthy balance sheet.
As at 31 March 2025
Current Borrowings: RM1.07 million
Non-Current Borrowings: RM0.11 million
Total Borrowings: RM1.18 million
As at 31 March 2024
Current Borrowings: RM1.25 million
Non-Current Borrowings: RM1.17 million
Total Borrowings: RM2.42 million
The total borrowings have decreased by over 50%, which is a strong indicator of financial stability and reduced leverage. This puts the company in a good position to manage future capital expenditures.
The company also has capital commitments of RM30.73 million for the purchase of property, plant, and equipment, signaling ongoing investment in its operational capabilities.
Risks, Prospects, and Strategic Outlook
OFIH is not resting on its laurels. The Group is actively pursuing expansion plans, including the construction of a new factory building. This initiative is expected to significantly boost production capacity, leading to higher sales revenue and an increased market share. This proactive approach highlights their commitment to long-term growth.
However, the report acknowledges potential headwinds. The global economic landscape, particularly the newly introduced U.S. tariffs and the escalating trade war between the U.S. and China, could lead to a volatile business outlook. This external uncertainty presents a challenge for companies with international exposure like OFIH.
To mitigate these risks and ensure sustainability, OFIH plans to focus on:
- Prudent procurement: Smart sourcing to manage input costs.
- Cost optimizing: Streamlining operations to reduce expenses.
- Operation efficiency: Enhancing productivity across the board.
The Board remains optimistic, expecting a “satisfactory and positive” performance for the financial year ending 31 March 2026, despite facing various challenges from competitive and uncertain markets.
Rewarding Shareholders: A Consistent Dividend Payer
One of the highlights for investors is OFIH’s consistent dividend payouts. For the financial year ended 31 March 2025, the company has declared a total interim single tier dividend of 6.50 sen per share. This includes a recent declaration of 2.0 sen per share on 28 May 2025, payable on 11 July 2025.
This commitment to returning value to shareholders, even amidst profit declines, reflects confidence in their underlying business and future prospects.
Summary and
Oriental Food Industries Holdings Berhad’s latest financial report paints a picture of a company with strong underlying revenue growth, particularly in its core snack and confectionery business. The increase in sales from both local and export markets is a testament to the demand for their products. However, the profitability dip in FY2025, largely attributed to foreign exchange losses and higher administrative expenses, indicates areas that require careful management.
The proactive expansion plans, including a new factory, signal a clear strategy for future growth and market share capture. The company’s focus on cost optimization and operational efficiency is crucial for navigating the challenging global economic environment and mitigating external risks. The significant reduction in borrowings also showcases a robust financial position.
Key risk points to monitor:
- Global Trade Tensions: The impact of U.S. tariffs and the U.S.-China trade war on export markets.
- Foreign Exchange Volatility: Continued currency fluctuations can affect profitability, as seen in this report.
- Competitive Landscape: The snack and confectionery market remains highly competitive, requiring continuous innovation and effective marketing.
Overall, OFIH appears to be a resilient company with a clear strategy for growth and a commitment to financial health. While the profit decline is a concern, the underlying revenue growth and strategic initiatives provide a positive outlook for future performance.
What Are Your Thoughts?
It’s clear that Oriental Food Industries is proactively addressing market challenges while pursuing growth. Their commitment to expanding production capacity and maintaining a strong balance sheet is commendable. However, the impact of external factors like foreign exchange and global trade dynamics cannot be ignored.
Do you think OFIH can maintain this growth momentum and overcome the profitability challenges in the coming years? Share your insights and perspectives in the comments below!
