Muda Holdings Berhad Navigates a Challenging First Quarter 2025 Amidst Market Headwinds
Greetings, fellow investors! Today, we’re diving into the latest financial performance of Muda Holdings Berhad (MHB) for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s operational resilience and strategic direction in a demanding market. While the quarter presented some significant challenges, marked by a decline in revenue and a widened loss before tax, it also highlights MHB’s ongoing commitment to strengthening its core operations and navigating the prevailing economic climate.
Let’s unpack the numbers and understand what’s shaping MHB’s journey.
Core Financial Highlights: A Quarter Under Pressure
Muda Holdings Berhad faced a tough start to the financial year, with its top-line revenue experiencing a slight dip compared to the same period last year. More notably, the Group recorded a significant loss before tax, primarily due to lower selling prices and external factors.
Key Financial Metrics (Q1 FY2025 vs Q1 FY2024)
Q1 FY2025
Revenue: RM351.9 million
Gross Profit: RM26.1 million
Loss Before Tax: RM(24.3) million
(Loss)/Earnings Per Share: (5.84) Sen
Q1 FY2024
Revenue: RM360.3 million
Gross Profit: RM45.5 million
Loss Before Tax: RM(3.2) million
(Loss)/Earnings Per Share: 0.31 Sen
Revenue for the first quarter of FY2025 stood at RM351.9 million, a 2.3% decrease from RM360.3 million in the corresponding quarter last year. This reduction was mainly attributed to lower Average Selling Prices (ASP), despite an increase in sales volume. The impact of lower ASP was acutely felt in the Gross Profit, which saw a substantial 42.6% decline to RM26.1 million from RM45.5 million.
Consequently, the Group reported a Loss Before Tax (LBT) of RM24.3 million, a significant widening from the RM3.2 million loss in the same period last year. This amplified loss was driven by:
- The aforementioned decrease in Gross Profit margin, which fell from 12.64% to 7.43%, while production costs remained stable.
- An unfavourable foreign exchange loss of RM1.5 million.
- A higher share of loss from an associate company.
The bottom line reflects this pressure, with the Group reporting a net loss attributable to owners of RM17.8 million, translating to a basic and diluted loss per share of (5.84) Sen, compared to a profit of RM0.956 million or 0.31 Sen per share in the prior year’s first quarter.
Segmental Performance: Mixed Fortunes
A closer look at MHB’s business segments reveals varied performance:
| Segment | Q1 FY2025 Revenue (RM’000) | Q1 FY2024 Revenue (RM’000) | Change (%) | Q1 FY2025 Segment (Loss)/Profit (RM’000) | Q1 FY2024 Segment Profit/(Loss) (RM’000) |
|---|---|---|---|---|---|
| Manufacturing | 324,657 | 327,130 | (0.8%) | (15,309) | 5,454 |
| Trading | 27,143 | 32,892 | (17.5%) | 2,462 | 387 |
| Others | 134 | 273 | (50.9%) | (501) | (66) |
The Manufacturing segment, MHB’s largest contributor, saw a marginal 0.8% decrease in revenue. However, its segment profit swung to a loss of RM15.3 million from a profit of RM5.45 million in the previous year, underscoring the impact of lower ASP and stable production costs.
The Trading segment experienced a more significant 17.5% decline in revenue, primarily due to the cyclical nature of the business. Despite this, the segment managed to increase its profit to RM2.46 million from RM0.387 million, indicating improved operational efficiency within this division.
Quarter-on-Quarter Performance: Signs of Resilience
Comparing the current quarter (Q1 FY2025) with the immediate preceding quarter (Q4 FY2024) offers a different perspective:
Q1 FY2025
Revenue: RM351.9 million
Loss Before Tax: RM(24.3) million
EBITDA: RM5.65 million
Q4 FY2024
Revenue: RM428.3 million
Loss Before Tax: RM(26.6) million
EBITDA: RM2.42 million
While revenue was 17.8% lower than the preceding quarter, mainly due to lower sales in the trading segment, MHB managed to narrow its Loss Before Tax from RM26.6 million in Q4 FY2024 to RM24.3 million in Q1 FY2025. This indicates an 8.6% reduction in the loss magnitude. Furthermore, Earnings Before Interest, Tax, Depreciation & Amortisation (EBITDA) saw a robust 133.2% increase to RM5.65 million from RM2.42 million, suggesting improved operational efficiency despite the revenue dip.
Financial Health and Cash Flow
MHB’s balance sheet shows a slight decrease in total assets to RM2,265.6 million as of 31 March 2025, from RM2,307.5 million at the end of 2024. Total equity also saw a minor reduction to RM1,208.3 million. Net assets per share stood at RM3.82. Total borrowings increased marginally to RM764.5 million from RM746.6 million.
On the cash flow front, MHB demonstrated improved operational cash generation. Net cash from operating activities increased to RM18.47 million in Q1 FY2025, up from RM14.35 million in Q1 FY2024. While cash used in investing activities increased due to higher capital work-in-progress incurred, net cash generated from financing activities saw a significant positive swing to RM5.075 million, compared to a net cash used of RM38.31 million in the same period last year. This suggests more effective management of debt drawdowns and repayments.
Risks and Future Prospects
Muda Holdings Berhad acknowledges that the outlook for the financial year ending 2025 remains challenging. Heightened geopolitical tensions and threats of restrictive trade policies continue to pose significant market volatility and challenges to the business environment. The Group’s performance is expected to be affected by:
- The dynamics of demand and supply for paper packaging products in the region.
- The ongoing efforts to optimise production outputs and efficiency.
- The broader global economic demand and growth trends.
Despite these headwinds, MHB is committed to maintaining its focus on critical strategic initiatives, including cost management, product innovation, efficiency improvement, and automation across its operations to uphold its competitiveness in the industry.
Summary and
Muda Holdings Berhad’s first quarter of FY2025 reflects a period of significant challenges, primarily driven by lower average selling prices and unfavourable exchange rate movements. The widening loss before tax and the shift to a segment loss in manufacturing are clear indicators of the pressures faced by the Group.
However, it’s not all grim. The sequential improvement in loss before tax and the substantial increase in EBITDA from the preceding quarter suggest that internal operational adjustments may be starting to bear fruit. The increase in cash generated from operating activities and the positive swing in financing cash flow are also encouraging signs of financial management.
The Group’s stated commitment to cost management, product innovation, efficiency, and automation is crucial for navigating the challenging external environment. These internal strategies will be key determinants of MHB’s ability to recover and thrive in the coming quarters.
For investors, this report underscores the importance of monitoring MHB’s execution of its strategic initiatives against the backdrop of global economic uncertainties. The paper and packaging industry is cyclical, and the current downturn in ASP is a significant factor. The Group’s ability to adapt and innovate will be paramount.
Key points to watch include:
- The trend of Average Selling Prices and their impact on gross margins.
- The effectiveness of cost management and efficiency improvement initiatives.
- The global economic outlook and its influence on demand for paper packaging products.
- The performance of the manufacturing segment, which is crucial for overall profitability.
What are your thoughts on Muda Holdings Berhad’s performance this quarter? Do you believe their strategic focus on cost management and efficiency will be enough to turn the tide in the coming quarters? Share your insights in the comments below!
Stay tuned for more analyses of Malaysian company reports. Happy investing!
