SAM Engineering & Equipment: Navigating Industry Headwinds in FY2025 with Strategic Focus
Greetings, fellow investors! Today, we’re diving deep into the latest unaudited interim financial report from SAM Engineering & Equipment (M) Berhad for the quarter and full fiscal year ended 31 March 2025. This report offers a crucial glimpse into the company’s performance amidst a dynamic global economic landscape, revealing both areas of resilience and segments facing significant challenges. While the full-year results show a dip in profitability, the company’s strategic moves and a cautiously optimistic outlook for its core industries are certainly worth a closer look. Let’s unpack the numbers and understand what they mean for SAM Engineering & Equipment’s journey ahead.
Financial Performance Highlights: A Mixed Picture
SAM Engineering & Equipment’s fiscal year 2025 concluded with a mixed financial performance. While revenue saw a minor decline, profit figures experienced a more noticeable contraction, reflecting ongoing market challenges in certain segments. Let’s break down the key figures:
Full Fiscal Year 2025 Performance (Compared to FY2024)
FY2025 (Ended 31 March)
- Revenue: RM1,480.5 million
- Profit Before Tax: RM115.4 million
- Net Profit: RM91.9 million
- Earnings Per Share: 13.58 sen
FY2024 (Ended 31 March)
- Revenue: RM1,497.4 million
- Profit Before Tax: RM143.8 million
- Net Profit: RM108.6 million
- Earnings Per Share: 19.53 sen
For the full fiscal year, the Group’s revenue decreased by 1.12% to RM1,480.5 million. More significantly, profit before tax saw a decline of 19.74%, settling at RM115.4 million, and net profit followed suit with a 15.34% reduction to RM91.9 million. Consequently, earnings per share for the year stood at 13.58 sen, down from 19.53 sen in the previous fiscal year.
Quarterly Performance (Q4 FY2025 vs Q4 FY2024)
Q4 FY2025 (Ended 31 March)
- Revenue: RM370.1 million
- Profit Before Tax: RM29.8 million
- Net Profit: RM25.6 million
- Earnings Per Share: 3.78 sen
Q4 FY2024 (Ended 31 March)
- Revenue: RM373.6 million
- Profit Before Tax: RM34.7 million
- Net Profit: RM26.1 million
- Earnings Per Share: 4.35 sen
Looking at the latest quarter, Q4 FY2025, revenue was marginally lower by 0.94% compared to the same period last year, reaching RM370.1 million. Profit before tax for the quarter decreased by 14.18% to RM29.8 million, with net profit seeing a slight dip of 1.96% to RM25.6 million. Earnings per share for the quarter were 3.78 sen.
Segmental Breakdown: Aerospace Soars, Equipment Faces Headwinds
The report provides a clear picture of the performance drivers, with each segment contributing differently to the overall results:
Full Year Segmental Revenue & Profit Before Tax (FY2025)
| Segment | Revenue (RM’000) | Profit Before Tax (RM’000) |
|---|---|---|
| Aerospace | 524,216 | 3,877 |
| Equipment | 956,333 | 111,542 |
For the full fiscal year 2025, the Equipment segment experienced a significant revenue decrease of RM109.7 million compared to the previous year. This was primarily due to lower demand from semiconductor and data storage customers, compounded by unfavorable foreign exchange translation. The segment’s profit before tax also fell by RM18.2 million, mainly attributed to lower sales, though partially offset by lower interest expense.
In contrast, the Aerospace segment saw its revenue increase by RM92.8 million. This growth was largely driven by the positive contribution from the newly acquired subsidiary, Aviatron (M) Sdn. Bhd. (“Aviatron”), which helped to offset the impact of unfavorable foreign exchange translation. However, the segment’s profit before tax decreased by RM10.2 million, impacted by lower sales, higher start-up costs in Thailand, and reduced government grants, despite the positive contribution from Aviatron and compensation received for defective material.
Strengthening the Balance Sheet: Reduced Borrowings
On the financial health front, SAM Engineering & Equipment managed to reduce its overall borrowings, a positive sign of prudent financial management.
As at 31 March 2025
- Total Assets: RM2,010.3 million
- Total Equity: RM1,425.9 million
- Total Borrowings: RM253.0 million
As at 31 March 2024
- Total Assets: RM2,079.5 million
- Total Equity: RM1,433.4 million
- Total Borrowings: RM297.5 million
The Group’s total borrowings decreased by RM44.5 million to RM253.0 million as at 31 March 2025, a reduction primarily driven by net cash generated from operations. This demonstrates a focus on deleveraging and improving financial stability.
Risks and Prospects: Navigating Industry Cycles
The company acknowledges the uncertain current economic outlook but maintains a cautiously optimistic long-term view, especially for its core industries:
Aerospace Industry Outlook
The International Air Transport Association (IATA) reported moderate passenger traffic demand, with a 3.3% year-on-year growth for March 2025. While Airbus and Boeing saw a slow start in Q1 2025 deliveries due to ongoing supply chain challenges, the company notes that its order backlog remains healthy. This suggests that despite short-term production hurdles, the underlying demand for aerospace components is robust, positioning SAM Engineering & Equipment well once supply chain issues ease.
Semiconductor Industry Outlook
The Semiconductor Equipment and Materials International (SEMI) projects global wafer fab equipment spending to grow by 2% year-on-year, reaching USD110 billion in 2025. This marks the sixth consecutive year of growth, supported by investments in advanced logic, DRAM, and high-bandwidth memory (HBM) technologies. Looking further ahead, SEMI forecasts an 18% growth in 2026, bringing spending to USD130 billion, driven by emerging technologies like Artificial Intelligence (AI), High-Performance Computing (HPC), and transitions to 2nm/3nm process nodes. SAM Engineering & Equipment is already seeing an uptick in requests for quotations from semiconductor equipment makers, indicating anticipated demand for next-generation technologies.
Strategic Expansion
A notable development is the incorporation of SAM Engineering & Equipment (USA), Inc. in California, USA, in October 2024. This wholly-owned subsidiary aims to provide customer support services related to manufacturing and serve as an International Procurement Office (IPO) for the Group. This move highlights the company’s commitment to strengthening its global presence and operational efficiency, particularly in key markets.
Dividend Announcement: Returning Value to Shareholders
The company has declared a single-tier first interim dividend of 2.80 sen per ordinary share for the financial year ended 31 March 2025. This dividend will be paid on 8 August 2025. While this is slightly lower than the 3.30 sen per share paid for the previous financial year, it still signifies the company’s commitment to returning value to its shareholders despite a challenging year for profitability.
Summary and Outlook
SAM Engineering & Equipment (M) Berhad’s fiscal year 2025 results reflect a period of adjustment, particularly for its Equipment segment which faced softer demand in the semiconductor and data storage sectors. The Aerospace segment, while showing revenue growth partly due to the Aviatron acquisition, also encountered profitability pressures from higher costs and lower government grants. However, the company’s proactive measures, such as reducing borrowings and expanding its international footprint with the new US subsidiary, demonstrate a strategic approach to navigate current market conditions.
Key points from this report include:
- Overall revenue saw a slight decrease, while net profit experienced a more significant decline, primarily due to weaker demand in the Equipment segment and increased costs in Aerospace.
- The Aerospace segment showed strong revenue growth, boosted by the Aviatron acquisition, despite some profitability headwinds.
- The company successfully reduced its total borrowings, improving its financial stability.
- The long-term outlook for both the aerospace and semiconductor industries remains positive, with projections for growth driven by new technologies and increasing demand.
- A dividend of 2.80 sen per share has been declared, reflecting a continued commitment to shareholder returns.
While the immediate financial performance presents challenges, the underlying trends in both the aerospace and semiconductor industries, coupled with SAM Engineering & Equipment’s strategic initiatives, paint a picture of cautious optimism for the future. The healthy order backlog in Aerospace and the anticipated rebound in semiconductor spending, driven by AI and advanced technologies, could provide strong tailwinds for the company moving forward.
What are your thoughts on SAM Engineering & Equipment’s latest performance? Do you believe their strategic investments and strong industry backlogs will help them rebound strongly in the coming years? Share your insights in the comments below!
