Navigating the Headwinds: A Deep Dive into Federal International Holdings Berhad’s Q3 FY2025 Performance
Greetings, fellow investors! Today, we’re unboxing the latest financial report from Federal International Holdings Berhad (FIHB) for the quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s journey through a dynamic economic landscape. While the numbers reveal some challenges, particularly a notable decline in turnover and a shift to a loss before tax, it’s essential to look beyond the headlines and understand the underlying dynamics of each business segment and the strategies FIHB is employing to navigate these headwinds. Let’s delve into the details to see what’s truly shaping FIHB’s performance.
Core Data Highlights: A Closer Look at the Numbers
Overall Financial Performance
FIHB’s Q3 FY2025 results show a significant contraction in revenue and a swing into a pre-tax loss compared to the same period last year. This highlights the challenging operating environment the company is facing.
Current Quarter (31/03/2025)
Revenue: RM 13,759k
Profit/(Loss) before taxation: RM (1,150)k
Profit/(Loss) for the period: RM (243)k
Basic Earnings Per Share: (0.18) sen
Preceding Year Corresponding Quarter (31/03/2024)
Revenue: RM 22,049k
Profit/(Loss) before taxation: RM (1,721)k
Profit/(Loss) for the period: RM (1,473)k
Basic Earnings Per Share: (1.06) sen
While revenue declined by approximately 38% for the quarter, it’s worth noting that the loss for the period significantly narrowed from RM1.473 million to RM243k. This improvement in the net loss was primarily attributed to a write-back of overprovision of tax in the current quarter.
Year-to-Date Performance
Looking at the cumulative period, the trend of declining revenue and a shift to loss persists, indicating a challenging financial year so far.
Current Year-to-Date (31/03/2025)
Revenue: RM 57,371k
Profit/(Loss) before taxation: RM (1,654)k
Profit/(Loss) for the period: RM (1,199)k
Basic Earnings Per Share: (0.88) sen
Preceding Year Corresponding Period (31/03/2024)
Revenue: RM 71,551k
Profit/(Loss) before taxation: RM 1,128k
Profit/(Loss) for the period: RM 312k
Basic Earnings Per Share: 0.23 sen
The year-to-date revenue saw a 19.8% decrease, and the group moved from a profit before tax of RM1.128 million to a loss before tax of RM1.654 million. This overall decline underscores the need to examine the performance of individual business units.
Segmental Breakdown: Understanding the Drivers
FIHB operates primarily through its Manufacturing and Construction and Interior Fit-Out (CIFO) divisions. Their individual performances tell a more nuanced story:
Manufacturing Division
For the current quarter, the Manufacturing Division showed a remarkable turnaround, with turnover increasing by 175% to RM 5.9 million from RM 2.1 million in the same quarter last year. This growth was accompanied by a significant improvement in profitability, with profit before tax rising to RM 453k from RM 71k. However, on a year-to-date basis, the division’s turnover declined by 8% to RM 10.9 million, resulting in a year-to-date loss before tax of RM 134k compared to a profit of RM 2.2 million last year.
Construction and Interior Fit-Out (CIFO) Division
The CIFO Division faced substantial headwinds, with a sharp 60% drop in turnover for the current quarter to RM 7.9 million from RM 19.9 million. The loss before tax for the quarter was RM 755k, comparable to the RM 768k loss in the corresponding quarter of the previous year. Year-to-date, CIFO’s turnover declined by 22% to RM 46.5 million, and its year-to-date profit before tax fell by 56% to RM 1.3 million from RM 3.0 million a year ago. This division’s performance was the primary driver of the group’s overall revenue decline.
Financial Health: Balance Sheet and Cash Flow
As of 31 March 2025, FIHB’s total assets stood at RM 187.064 million, a slight increase from RM 181.830 million at 30 June 2024. Equity attributable to owners of the parent decreased marginally to RM 108.946 million from RM 111.093 million. Current assets saw an increase, largely driven by trade receivables, while cash and bank balances decreased. Total liabilities increased to RM 78.118 million, mainly due to higher borrowings.
From a cash flow perspective, the group reported net cash used in operating activities of RM (16,864)k for the period, a significant shift from the RM 17,977k generated in the previous year. This indicates increased operational cash burn. Net cash generated from financing activities, however, was positive at RM 11,941k, primarily due to higher loans raised, offsetting the cash used in operations and the acquisition of treasury shares.
| Financial Position Item | As at 31/03/2025 (RM’000) | As at 30/06/2024 (RM’000) |
|---|---|---|
| Total Assets | 187,064 | 181,830 |
| Total Equity | 108,946 | 111,093 |
| Total Liabilities | 78,118 | 70,737 |
Navigating Risks and Charting the Future
FIHB’s report also sheds light on the challenges and opportunities ahead:
Manufacturing Division Outlook
The manufacturing division faces a significant reduction in export orders, a consequence of a challenging global retail sector, inflationary pressures, and heightened competition in its export markets. Future prospects are tied to the store expansion plans of key customers and the company’s ability to secure new sales. To mitigate the impact of reduced revenue, the division is focusing on cost-control measures and is selectively taking on interior fit-out (IFO) projects as a project manager and manufacturer for external and related companies.
Construction and Interior Fit-Out (CIFO) Division Outlook
Despite the recent decline, the CIFO division holds ongoing secured projects with a combined contract value of RM 137 million, excluding contracts over 90% completed. This provides some profit visibility for the future. The company expects to secure further related party contracts, which should contribute significantly to the group’s performance. The division’s success hinges on the timely and uninterrupted execution of these projects and effective management of rising construction costs.
Broader Economic Environment
The broader economic outlook remains uncertain. Potential downside risks include escalating geopolitical tensions, higher-than-anticipated inflation, and volatility in global financial markets. These factors could lead to continued supply chain disruptions and price escalations, potentially compressing profit margins across all divisions. FIHB’s strategy is to continue focusing on mitigating these risks to maintain stability in a volatile operating environment.
Summary and Investment Considerations
Federal International Holdings Berhad’s Q3 FY2025 report paints a picture of a company navigating a challenging period. While overall revenue and profitability have seen declines, particularly in the CIFO division, the manufacturing division showed strong quarterly growth. The group is actively implementing cost-control measures and leveraging existing project pipelines to maintain stability. The management’s focus on securing new projects and managing costs in a volatile global economy will be crucial for its future performance.
Key points to consider for the future:
- The ability of the Manufacturing Division to secure new export orders and benefit from key customer expansion plans.
- The timely execution of the secured RM137 million CIFO projects and the successful acquisition of anticipated related party contracts.
- Effective management of rising construction costs and supply chain disruptions amidst global economic uncertainties.
- The impact of global inflation and geopolitical tensions on overall operating margins.
From an objective standpoint, FIHB is clearly in a phase of adjustment, responding to macro-economic pressures and specific segmental challenges. The significant secured projects in CIFO offer a silver lining, while the manufacturing division’s quarterly rebound shows potential, even if year-to-date figures are still negative. The company’s ability to execute its strategies and adapt to the volatile market will be key to its recovery and future growth.
What are your thoughts on FIHB’s latest performance? Do you believe their strategies are sufficient to overcome the current market challenges and return to sustainable growth? Share your insights in the comments below!
