Hello, fellow investors and market watchers! Today, we’re diving deep into the latest financial performance of **UCHI Technologies Berhad**, a prominent player in Malaysia’s electrical and electronic appliances industry. The company has just released its first-quarter results for the period ended March 31, 2025, and while the numbers reveal some headwinds, they also showcase the company’s underlying resilience and commitment to shareholder returns.
This report offers a comprehensive look at UCHI’s operational and financial health, providing insights into its revenue streams, profitability, and strategic outlook amidst a challenging global economic landscape. Let’s break down the key highlights from their latest announcement.
Q1 2025 Financial Performance: A Closer Look
UCHI Technologies faced a tougher quarter compared to the same period last year, primarily due to softer sales demand and the depreciation of the US Dollar against the Malaysian Ringgit. However, the company managed to remain profitable, a testament to its operational efficiency.
Revenue Performance
The first quarter saw a notable decline in revenue. In US Dollar terms, revenue decreased by 24%, while in Ringgit Malaysia, the drop was even more pronounced due to currency fluctuations.
Q1 2025 Revenue
RM 44,932,000
USD 10,114,000
Q1 2024 Revenue
RM 62,219,000
USD 13,316,000
This represents a 28% decrease in RM revenue and a 24% decrease in USD revenue compared to the quarter ended March 31, 2024. The primary driver for this decline was lower sales demand for the Group’s products and services, exacerbated by the stronger Ringgit against the US Dollar.
Profitability Metrics
Despite the dip in revenue, UCHI Technologies maintained a healthy profit margin. Let’s examine the profit figures:
Q1 2025 Profit Before Tax
RM 27,989,000
Q1 2024 Profit Before Tax
RM 40,065,000
Q1 2025 Net Profit
RM 21,356,000
Q1 2024 Net Profit
RM 32,049,000
Q1 2025 Basic Earnings Per Share
4.63 sen
Q1 2024 Basic Earnings Per Share
6.97 sen
The decline in profit before tax and net profit is largely attributable to the lower revenue, an equity-settled share-based payment of RM0.55 million recognised in the current quarter for employee share options, and an unfavourable net foreign exchange loss. In the immediate preceding quarter (Q4 2024), profit before tax was RM29.2 million, showing a slight decrease of 4% in the current quarter, while net profit saw a marginal 1% increase from RM21.2 million, indicating some cost management efforts.
Operational Cost Structure
For the period ended March 31, 2025, the Group’s highest expenditure remained material consumption at 54%, followed by employee benefit expenses at 32%, and depreciation and amortization at 5%. Understanding these cost drivers helps in assessing the company’s operational efficiency.
Segment and Geographical Performance
UCHI’s business is primarily driven by its manufacturing segment, with the “Art-of-Living” segment being the dominant contributor to revenue (RM43.1 million in Q1 2025, down from RM57.3 million in Q1 2024). The “Biotechnology” segment also contributed (RM1.8 million in Q1 2025, down from RM4.9 million in Q1 2024).
Geographically, Europe remains UCHI’s largest market, accounting for RM44.4 million in Q1 2025, though this was lower than the RM60.9 million from the same period last year. Asia Pacific and the United States of America contributed smaller portions of revenue.
Navigating Risks and Future Prospects
The management acknowledges a more complex business landscape for the financial year ending December 31, 2025. Several external factors are contributing to this uncertainty:
- Global Economic Uncertainty: This includes reciprocal tariffs, geopolitical tensions, and inflationary pressures.
- Market Volatility: Unpredictable market conditions can impact demand.
- USD Fluctuations: As seen this quarter, currency movements can significantly affect reported revenues and profits.
- Changes in Material and Labor Costs: These operational challenges can squeeze margins.
Despite these challenges, UCHI Technologies expresses confidence in its ability to remain profitable and maintain a strong balance sheet. This confidence stems from its strategic initiatives, including the pioneer status granted to its subsidiary, Uchi Optoelectonic (M) Sdn. Bhd., for the design, development, and manufacture of configurable presence and distance sensing time-of-flight (CPDS-ToF) modules. This incentive provides a 100% income tax exemption for five years starting January 1, 2023, for income derived from these products, which is a significant boost to future profitability.
The company also actively manages foreign currency risks through forward contracts, with USD18.1 million in outstanding contracts as of March 31, 2025, to be settled by March 2026. This proactive approach helps mitigate the impact of currency volatility.
Dividends: Rewarding Shareholders
UCHI Technologies continues its commitment to returning value to shareholders. During the quarter, the company paid a third interim single-tier dividend of 4 sen per share and a special tax-exempt dividend of 5 sen per share for the year ended December 31, 2024, totaling RM41.568 million. Additionally, a final single-tier dividend of 6 sen per share for the year ended December 31, 2024, has been proposed and, if approved by shareholders, will be paid on June 26, 2025.
Key Dividend Payments/Proposals:
- Paid (March 27, 2025): 4 sen interim + 5 sen special (for FY2024)
- Proposed (if approved): 6 sen final (for FY2024)
Summary and Outlook
UCHI Technologies Berhad’s Q1 2025 report reflects a period of adjustment in the face of a challenging global economic environment and softer demand. While revenue and profits saw a decline compared to the previous year’s corresponding quarter, the company managed to maintain profitability, showcasing its operational resilience. The significant contribution of the pioneer status for its subsidiary is a positive long-term factor, offering tax exemptions that will support future earnings.
The management’s cautious outlook, refraining from specific financial guidance due to uncertainties like reciprocal tariffs and geopolitical tensions, is understandable. However, their confidence in maintaining profitability and a strong balance sheet, coupled with proactive risk management strategies like foreign currency hedging, provides a degree of reassurance. The consistent dividend payouts further underscore the company’s financial stability and commitment to shareholders.
Key points from the report that stand out:
- Revenue decline driven by lower sales demand and unfavorable currency exchange rates.
- Profitability maintained despite revenue pressures, with cost management and tax incentives playing a role.
- Strategic pioneer status grant for a subsidiary provides long-term tax benefits.
- Proactive hedging strategies in place to manage foreign currency risks.
- Consistent dividend distributions, signaling financial health and shareholder returns.
From a professional standpoint, UCHI Technologies appears to be navigating a difficult period with prudence. Their focus on maintaining a strong balance sheet and leveraging strategic tax incentives positions them to weather ongoing uncertainties. The dividend payouts are also a positive sign for investors seeking regular returns.
What are your thoughts on UCHI Technologies’ Q1 2025 performance? Do you believe the company can maintain its profitability and strong balance sheet in the face of global economic headwinds? Share your views in the comments below!
