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Q1 FY2025 Performance: A Closer Look at the Numbers

CCK’s financial performance for the first quarter of fiscal year 2025 presents a nuanced picture. While overall revenue saw a modest increase, profit figures experienced a contraction. Here’s a comparative overview:

The Group’s revenue for Q1 FY2025 increased marginally by 1.3% to RM264.0 million from RM260.7 million in the corresponding quarter last year. This growth was primarily fueled by improved performances in the retail and prawn segments, which managed to offset declines in the poultry and food service segments.

Despite the revenue uptick, gross profit declined by 8% to RM57.5 million from RM62.6 million. This led to a 5% decrease in Profit Before Taxation (PBT) to RM26.0 million, down from RM27.5 million. The Profit After Taxation (PAT) also saw a 6% reduction, settling at RM20.2 million. More notably, the profit attributable to owners of the Company experienced an 18% decrease, resulting in a basic earnings per share of 2.82 sen, compared to 3.44 sen previously.

Segmental Performance Breakdown

Understanding the performance of each business unit provides deeper insights into CCK’s overall results:

• Retail Segment: This segment continued to be a strong contributor, with revenue increasing by 3.3% due to contributions from its established retail network and robust consumer demand. The company expanded its retail footprint, adding one new supermarket in Bintulu, Sarawak, bringing its total touch points to 78 (up from 75 in Q1 FY2024). However, despite a favorable product mix, the segment’s PBT decreased by 10.6% to RM17.4 million, largely due to strategic pricing adjustments aimed at enhancing competitiveness. CCK’s Indonesian manufacturing operations, classified under the retail segment, also saw an improved revenue of RM55.7 million, driven by strong demand for in-house manufactured processed products.
• Poultry Segment: Revenue for the poultry segment declined to RM83.2 million. This was mainly attributed to a moderation in demand for poultry products from both institutional clients and the company’s own retail stores. Despite the revenue dip, the segment’s PBT saw a 3.5% increase to RM5.5 million. This improvement highlights effective cost management initiatives, disciplined pricing strategies, and favorable feed input costs that helped preserve margins.
• Prawn Segment: The prawn segment delivered a positive performance, with external revenue improving by 6.6% to RM23.3 million. PBT for this segment was slightly higher at RM2.6 million, supported by improved average selling prices and higher sales volumes to key export markets.
• Food Service Segment: This segment faced challenges, reporting a lower revenue of RM3.4 million and a significantly reduced PBT of RM49,000. This decline was primarily due to lower sales volume and demand from government schools in Sarawak under existing supply contracts.
• Share of Results in Associate: CCK’s share of results from its associate company, Gold Coin (Sarawak) Sdn Bhd, improved to RM1.3 million, up from RM1.1 million in the previous corresponding period.

Financial Health and Cash Flow Dynamics

A look at the balance sheet as of 31 March 2025 shows total assets at RM741.9 million, with total equity at RM611.2 million. Net assets per share remained stable at RM0.98. The Group’s borrowings stood at RM45.8 million, largely stable compared to RM45.0 million in the previous year’s corresponding quarter.

Perhaps one of the most striking aspects of this report is the significant improvement in the Group’s cash flow. Net cash from operating activities more than doubled to RM17.0 million in Q1 FY2025, a substantial increase from RM8.0 million in Q1 FY2024. Furthermore, net cash from investing activities turned strongly positive at RM19.7 million, a stark contrast to the outflow of RM8.7 million in the prior year. This positive shift was primarily driven by proceeds from the disposal of a short-term investment amounting to RM31.5 million.

However, net cash for financing activities showed an outflow of RM29.0 million. This was largely due to the payment of a special interim single-tier dividend of 5.0 sen per ordinary share for the financial year ended 31 December 2024, amounting to RM31.0 million. This dividend payment reflects the company’s commitment to returning value to its shareholders.

The report also provides an update on the utilisation of proceeds from the disposal of PT Adilmart shares and a share subscription by Astrantia. Funds are being strategically deployed for factory expansion, construction of broiler farms, and digitalisation initiatives, with most projects still ongoing, indicating future growth potential.

Risks and Future Prospects

CCK acknowledges that it continues to operate in a dynamic and increasingly challenging retail environment. Despite these headwinds, the company remains steadfast in its core mission: delivering essential everyday staples such as poultry, seafood, and fresh produce through its extensive network of urban and rural outlets. This focus on fundamental consumer needs provides a degree of stability amidst shifting consumer sentiment.

The company remains vigilant about ongoing cost pressures, particularly those stemming from exchange rate fluctuations that impact key inputs like corn and soy. In response, CCK is committed to implementing prudent cost management strategies and actively seeking operational efficiencies to maintain its competitive edge.

While the expansion of its retail network remains a long-term strategic goal, CCK is adopting a measured approach, aligning growth plans with prevailing market conditions. Looking ahead, the company expresses cautious optimism, with a strong focus on sustaining performance through disciplined execution and fostering resilience across its integrated operations.

Final Thoughts and Engagement

From a professional standpoint, CCK appears to be managing its business with a pragmatic approach. The decision to absorb some costs through strategic pricing, while impacting short-term profitability, could be a long-term play to maintain market share and consumer loyalty. The strong cash flow generation is a significant positive, providing the company with flexibility for future investments and capital returns.

What are your thoughts on CCK’s Q1 FY2025 performance? Do you think their strategic pricing adjustments will pay off in the long run? Can they maintain this operational resilience in the face of ongoing cost pressures? Share your insights in the comments section below!