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Kawan Food Berhad Navigates Headwinds: A Look at Q1 2025 Performance
Malaysian frozen food giant, Kawan Food Berhad, has released its unaudited condensed consolidated financial statements for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s performance amidst a dynamic market landscape. While the numbers reflect a challenging quarter, marked by a dip in revenue and profit, the report also highlights strategic resilience and areas of growth that warrant a closer look. Notably, the company continued its commitment to shareholder returns with a dividend declaration for the financial year 2024.
Key Takeaway: Kawan Food Berhad experienced a challenging first quarter in 2025 with revenue and profit declines, primarily due to softer export demand and unfavourable foreign exchange movements. However, robust domestic performance and strategic initiatives offer a silver lining.
Unpacking the Financials: A Quarter of Contraction
The first quarter of 2025 saw Kawan Food Berhad facing a notable contraction in its top and bottom lines when compared to the same period last year. Let’s dive into the core figures:
Revenue Performance
The company reported a net revenue of RM70.5 million for Q1 2025, a 12.6% decrease from RM80.6 million in Q1 2024. This decline was largely attributed to softer demand in key export markets, particularly North America and China, which we’ll explore further in the segment analysis.
Net Revenue (Q1 2025)
RM70,488,000
Net Revenue (Q1 2024)
RM80,642,000
Profitability Snapshot
Profitability also took a hit, with profit before tax (PBT) decreasing by 46.5% to RM6.0 million from RM11.2 million in Q1 2024. Consequently, profit after tax (PAT) for the period fell by 48.5% to RM4.7 million from RM9.2 million. The report cites lower sales volume in core markets and unrealised foreign exchange losses from the depreciation of the USD against the MYR as primary drivers for this reduction.
Profit Before Tax (Q1 2025)
RM6,001,000
Profit Before Tax (Q1 2024)
RM11,221,000
Profit After Tax (Q1 2025)
RM4,747,000
Profit After Tax (Q1 2024)
RM9,224,000
Earnings Per Share (EPS)
Basic earnings per share mirrored the profit decline, registering 1.35 sen in Q1 2025, down from 2.54 sen in the corresponding quarter last year.
Basic EPS (Q1 2025)
1.35 sen
Basic EPS (Q1 2024)
2.54 sen
Geographical Segment Performance
A closer look at the geographical segments reveals a mixed bag of results:
| Region | Q1 2025 Revenue (RM’000) | Q1 2024 Revenue (RM’000) | Change (%) |
|---|---|---|---|
| Malaysia | 44,093 | 40,200 | +9.7% |
| China | – | 2,917 | -100.0% |
| Rest of Asia | 7,174 | 9,591 | -25.2% |
| Europe | 8,309 | 7,490 | +10.9% |
| North America | 8,574 | 18,151 | -52.8% |
| Oceania | 2,179 | 1,916 | +13.7% |
| Africa | 159 | 377 | -57.8% |
While Malaysia, Europe, and Oceania demonstrated healthy revenue growth, the significant drops in North America, China, and Africa were the primary contributors to the overall revenue decline. The 100% decrease in China suggests a complete withdrawal or cessation of sales in that market during the period.
Strong Cash Flow Generation
Despite the challenges in revenue and profit, Kawan Food Berhad demonstrated strong operational cash flow. Net cash from operating activities significantly increased to RM31.8 million in Q1 2025, up from RM8.2 million in Q1 2024. This robust cash generation is a positive sign of the company’s underlying operational efficiency and ability to manage its working capital effectively, as evidenced by a substantial increase in trade and other payables.
Net Cash from Operating Activities (Q1 2025)
RM31,807,000
Net Cash from Operating Activities (Q1 2024)
RM8,177,000
Dividend Declaration
In line with its commitment to shareholders, Kawan Food Berhad declared a final single-tier dividend of 2.0 sen per ordinary share for the financial year ended 31 December 2024, totaling RM6,801,730. This dividend was paid on 27 March 2025, reflecting the company’s continued efforts to return value to its investors despite the current quarter’s softer performance.
Navigating Headwinds: Risks and Strategic Outlook
Kawan Food Berhad operates in a dynamic global environment, and its latest report sheds light on both the challenges and the strategic pathways forward.
Market Challenges and External Headwinds
The company acknowledges the impact of global volatility, including geopolitical tensions and currency fluctuations, particularly the unfavorable movement of the USD against the MYR. The softer export market demand, especially after the seasonal peak in 4Q 2024, was a significant factor affecting the current quarter’s performance. The decline in sales to North America and the complete absence of sales in China highlight specific regional challenges that the company must address.
Strategic Outlook and Growth Drivers
Despite these external headwinds, Kawan Food Berhad remains optimistic about its long-term growth prospects. The management anticipates growth to be primarily driven by:
- Strong Domestic Demand: A healthy demand for convenient, high-quality frozen foods within Malaysia is expected to be a key growth engine.
- International Market Expansion: The Group plans to expand in key international markets through innovation, targeted marketing, and improved distribution channels. This suggests a proactive approach to diversify its export base and reduce reliance on currently softer markets.
- Supply Chain Resilience: Strengthening supply chain resilience is a core focus, which is crucial in mitigating the impact of global disruptions and ensuring consistent product availability.
- Product Range Broadening: The company aims to broaden its product range to meet evolving consumer needs, indicating a commitment to innovation and market responsiveness.
The steady revenue growth observed in Malaysia and promising performance in Europe and Oceania underscore the Group’s leadership in core segments and its competitiveness across various markets, providing a solid foundation for future growth.
Summary and
Kawan Food Berhad’s first quarter of 2025 reflects a period of adjustment, with overall revenue and profit experiencing a decline primarily due to subdued export demand and adverse foreign exchange movements. However, the company’s strong cash flow from operations and continued growth in domestic, European, and Oceanian markets demonstrate underlying resilience and strategic adaptability.
The management’s focus on strengthening domestic presence, expanding strategically in international markets, enhancing supply chain resilience, and diversifying its product portfolio are crucial steps to navigate the current challenging environment and secure future growth. While the short-term outlook is impacted by global volatility, the long-term prospects are supported by stable demand for frozen foods and the company’s proactive strategies.
Key risk points to consider for Kawan Food Berhad’s future performance include:
- Continued softness in key export markets, particularly North America and the ability to re-establish presence or grow in other markets like China.
- Further unfavorable fluctuations in foreign exchange rates, especially the USD against the MYR, which can impact profitability.
- The effectiveness of new product development and market expansion strategies in offsetting current revenue declines.
- Global geopolitical tensions and supply chain disruptions that could affect raw material costs and distribution efficiency.
Kawan Food Berhad’s Q1 2025 report presents a nuanced picture of a company facing temporary headwinds but with clear strategies to maintain its market position and pursue growth. The resilience shown in domestic and select international markets, coupled with strong cash generation, provides a foundation for optimism.
What are your thoughts on Kawan Food Berhad’s performance this quarter? Do you believe their strategies for domestic and international expansion will effectively counter the current challenges? Share your insights in the comments below!
