EVERGREEN FIBREBOARD BERHAD: A Deep Dive into Q1 2025 Performance – Growth Amidst Headwinds?
Greetings, fellow investors and market enthusiasts! Today, we’re unboxing the latest financial report from EVERGREEN FIBREBOARD BERHAD (EGF), a prominent player in Malaysia’s timber and wood-based products industry. Their first-quarter results for the period ended 31 March 2025 have just landed, and they paint a picture of resilience in revenue growth, yet a significant challenge on the profitability front. What’s driving these numbers, and what does it mean for the road ahead? Let’s break it down.
At first glance, the report shows a commendable increase in revenue, signaling strong market demand or effective pricing strategies. However, the spotlight quickly shifts to the profit figures, which have seen a notable contraction. This divergence begs a closer look at the underlying factors, from operational efficiencies to external market dynamics. Ready to explore the details?
Core Data Highlights: Unpacking the Numbers
EGF’s Q1 2025 performance reveals a mixed bag. While top-line growth is encouraging, profitability faced headwinds. Let’s compare the key financial metrics for the current quarter against the same period last year:
Q1 2025
Revenue: RM252.80 million
Profit Before Tax (PBT): RM2.19 million
Profit After Tax (PAT): RM0.64 million
Earnings Per Share (EPS): 0.08 sen
Q1 2024
Revenue: RM222.74 million
Profit Before Tax (PBT): RM8.79 million
Profit After Tax (PAT): RM6.09 million
Earnings Per Share (EPS): 0.72 sen
Overall, the Group’s revenue for Q1 2025 surged by an impressive 13.5% to RM252.80 million compared to RM222.74 million in the same period last year. This increase was primarily driven by higher sales volume and improved average selling prices. However, Profit Before Tax (PBT) saw a substantial decrease of 75.0%, plummeting from RM8.79 million to RM2.19 million. Similarly, Profit After Tax (PAT) took a significant hit, falling by 89.4% to RM0.64 million from RM6.09 million previously. The Earnings Per Share (EPS) also reflected this decline, dropping from 0.72 sen to just 0.08 sen.
The primary culprit behind the sharp drop in profitability appears to be an unfavorable movement in foreign exchange, which resulted in a RM7.2 million negative swing compared to the same quarter last year. Additionally, higher raw material costs and production costs due to lower production volume (attributed to limited wood supply from seasonal rainy weather) further impacted the bottom line.
Segmental Performance: A Closer Look
EGF operates across different geographical segments, each contributing uniquely to the overall performance:
Malaysia Segment
Revenue for the Malaysia segment slightly increased by 1.1% to RM97.27 million (Q1 2024: RM96.18 million), mainly due to higher average selling prices for panel boards. However, loss before tax widened significantly to RM14.23 million (Q1 2024: loss of RM7.63 million). This was primarily due to a foreign exchange loss in the current quarter contrasting with a gain in the prior year, coupled with higher raw material costs and reduced production volume stemming from seasonal wet weather impacting wood supply.
Thailand Segment
The Thailand segment was a strong performer on the revenue front, jumping by 25.5% to RM127.76 million (Q1 2024: RM101.82 million). This growth was fueled by both higher sales volume and average selling prices. Profit before tax remained comparable at RM14.26 million (Q1 2024: RM14.04 million), as higher wood costs from seasonal wet weather and a smaller foreign exchange gain mitigated the positive effects of increased sales and prices.
Others Segment
The ‘Others’ segment also saw revenue growth, up by 12.2% to RM27.77 million (Q1 2024: RM24.74 million), driven by higher average selling prices. Profit before tax was largely stable at RM2.17 million (Q1 2024: RM2.37 million), again impacted by higher wood costs from seasonal rains and foreign exchange losses offsetting the positive revenue trends.
Quarter-on-Quarter Comparison (Q1 2025 vs Q4 2024)
Comparing the current quarter’s performance to the immediate preceding quarter (Q4 2024) also provides valuable insights:
Q1 2025
Revenue: RM252.80 million
Profit Before Tax (PBT): RM2.19 million
Q4 2024
Revenue: RM214.67 million
Profit Before Tax (PBT): RM2.26 million
Revenue increased by 17.8% from RM214.67 million in the preceding quarter to RM252.80 million in Q1 2025, primarily due to higher sales volume from panel boards and downstream products, as well as improved average selling prices. However, Profit Before Tax marginally decreased by 2.7% from RM2.26 million to RM2.19 million. This slight dip was mainly due to a significant unfavorable movement in foreign exchange of RM12.0 million between the two quarters.
Financial Health: Borrowings Overview
Understanding a company’s debt profile is crucial. Here’s a snapshot of EGF’s borrowings:
| Category | As at 31 March 2025 (RM’000) | As at 31 March 2024 (RM’000) |
|---|---|---|
| Short Term Borrowings: | ||
| Secured | 8,897 | 17,897 |
| Unsecured | 154,068 | 115,062 |
| Subtotal Short Term | 163,534 | 132,959 |
| Long Term Borrowings: | ||
| Secured | 108,546 | 81,432 |
| Unsecured | 160 | 8,958 |
| Subtotal Long Term | 108,706 | 90,390 |
| Total Borrowings | 272,240 | 223,349 |
Total borrowings increased to RM272.24 million as of 31 March 2025, up from RM223.35 million a year ago. This increase is largely seen in both short-term and long-term unsecured borrowings, indicating potential expansion or operational funding needs. The report also details borrowings denominated in various currencies, including RM, USD, and Euro, highlighting the Group’s exposure to foreign exchange fluctuations, which as we’ve seen, can significantly impact profitability.
Risks and Prospects: Navigating the Future
The global economic landscape remains dynamic, and EGF is not immune to external pressures. The report highlights a few key areas:
Global Trade Uncertainty: The recent tariff announcements by the US President have disrupted established supply chains and introduced uncertainty into world trade. While Malaysia may seem less affected than some neighboring countries, a slowdown in global trade will eventually impact all players. EGF acknowledges this risk but holds hope that these disruptions will be resolved.
Foreign Exchange Volatility: As evident from the Q1 results, unfavorable foreign exchange movements can significantly erode profits. Given the Group’s international operations and multi-currency borrowings, this remains a persistent risk.
Raw Material Supply and Cost: Seasonal wet weather affecting wood supply and leading to higher raw material costs and lower production volumes, particularly in Malaysia and Thailand, directly impacts operational efficiency and profitability.
Despite these challenges, EGF is actively pursuing strategies for growth and resilience. The new production line in Indonesia is reportedly running with improving productivity as scheduled. Management is committed to restructuring its operations to align with developing situations, indicating a proactive approach to adapting to market changes and optimizing performance.
Summary and
EVERGREEN FIBREBOARD BERHAD’s Q1 2025 results present a mixed picture. The Group has demonstrated strong top-line growth, indicating robust demand for its products and effective pricing strategies. This is a positive sign of operational strength and market positioning. However, profitability has been significantly impacted by external factors, primarily unfavorable foreign exchange movements and higher raw material costs exacerbated by seasonal weather conditions affecting wood supply.
The company’s strategic focus on improving productivity at its new Indonesia line and its commitment to operational restructuring are crucial steps in mitigating these challenges and positioning itself for future growth. While the immediate profitability figures are concerning, the underlying revenue growth provides a foundation for recovery, assuming external headwinds stabilize.
Key risk points to monitor moving forward include:
- Continued volatility in foreign exchange rates, especially given the Group’s multi-currency exposures.
- Fluctuations in raw material prices and the consistency of wood supply, which directly impact production costs.
- The broader impact of global trade policies and economic slowdowns on international demand for wood-based products.
- The effectiveness of the company’s operational restructuring and productivity improvements, particularly in the new Indonesian line.
Final Thoughts: What’s Next for EGF?
EGF’s Q1 2025 report highlights the delicate balance between revenue growth and managing external cost pressures. The company’s ability to increase sales volume and average selling prices is commendable, showcasing its market presence. However, the significant impact of foreign exchange and raw material costs underscores the vulnerabilities inherent in global operations.
The management’s commitment to improving productivity and restructuring operations offers a ray of hope for navigating these challenging waters. The focus on the new Indonesia line suggests a long-term vision for expansion and efficiency.
Do you think EVERGREEN FIBREBOARD BERHAD can effectively overcome these external challenges and translate its revenue growth into sustainable profitability in the coming quarters? Share your thoughts and insights in the comments below!
