Navigating the currents of the global economy is no small feat, yet companies like Muhibbah Engineering (M) Bhd are constantly striving to chart a course for growth. As a seasoned observer of the Malaysian market, I’ve just delved into their latest unaudited results for the first quarter ended 31 March 2025. And while the journey ahead promises its share of challenges, there are certainly some noteworthy highlights in their recent performance.
The core takeaway? Muhibbah Engineering has demonstrated resilience, achieving a commendable increase in profit before tax and earnings per share for the quarter, largely propelled by its Concessions division. This performance signals a steady hand at the helm, even as broader market conditions remain complex.
Key Highlight: Despite a challenging global economic landscape, Muhibbah Engineering recorded a solid 5.65% increase in Profit Before Tax and a significant 13.95% jump in Net Profit attributable to owners compared to the first quarter of last year.
Q1 2025 Performance: A Closer Look at the Numbers
Let’s break down the financial heartbeat of Muhibbah Engineering for the first three months of 2025, comparing it against the same period in 2024 to truly understand its trajectory.
Top-Line Growth and Profitability
The Group’s consolidated revenue, which includes its share from associates, saw a modest but positive uptick. More impressively, this growth translated into stronger profits, signaling improved operational efficiency or better contributions from key segments.
Q1 2025
Total Revenue (including associates): RM431.3 million
Profit Before Tax: RM32.7 million
Net Profit Attributable to Owners: RM16.2 million
Basic Earnings Per Share: 2.22 Sen
Q1 2024
Total Revenue (including associates): RM413.9 million
Profit Before Tax: RM30.9 million
Net Profit Attributable to Owners: RM14.2 million
Basic Earnings Per Share: 1.95 Sen
This translates to:
- Total Revenue: A 4.21% increase.
- Profit Before Tax: A robust 5.65% growth.
- Net Profit Attributable to Owners: A significant 13.95% surge.
- Basic Earnings Per Share: Rising by 13.85%.
The improved performance was primarily driven by the Group’s Concession division, underscoring its strategic importance and consistent contribution to the bottom line.
Financial Health and Cash Flow
Looking at the balance sheet as at 31 March 2025, the company’s net assets per share attributable to owners saw a slight increase to RM1.87 from RM1.86 at the end of 2024, indicating a stable equity position.
However, a closer look at the cash flow statement reveals a notable change. Net cash generated from operating activities for Q1 2025 stood at RM7.24 million, a significant decrease from RM93.10 million in Q1 2024. This reduction in operational cash generation warrants attention, as it might be influenced by changes in working capital or other operational dynamics during the period.
Risks, Prospects, and Strategic Direction
No company operates in a vacuum, and Muhibbah Engineering is acutely aware of the broader economic environment. The Group acknowledges the challenging global economic landscape, citing potential headwinds from new tariff policies, ongoing geopolitical conflicts disrupting supply chains, and persistent inflationary pressures affecting labour, material, and operational costs.
Despite these challenges, the Group’s strategy remains clear: to continuously monitor and adapt to new developments while actively pursuing new orders. As at 22 May 2025, the Group’s total outstanding secured order book for its construction and cranes divisions stood at a healthy RM1.14 billion. This provides a strong foundation and visibility for future revenue streams.
Updates on Material Litigations
It’s also important to note the ongoing material litigations. On a positive note, the Dubai International Arbitration Centre (DIAC) has awarded Muhibbah Engineering EUR 8.8 million (approximately RM45.6 million) plus costs in its claim against the Syrian Civil Aviation Authority (SCAA), with SCAA’s attempt to nullify the award being dismissed. This is a significant win for the Group.
However, arbitration with TTCL Malaysia Sdn Bhd remains ongoing, as does a tax assessment appeal with the Inland Revenue Board of Malaysia (IRB) and an arbitration with Haumea Offshore Sdn Bhd (TFO), where Muhibbah Engineering will contest a RM43.4 million claim and file a counter-claim. These ongoing cases represent both potential recoveries and liabilities that warrant continued monitoring.
Summary and
Muhibbah Engineering’s first quarter 2025 results paint a picture of a company that is managing to grow its bottom line despite a complex global backdrop. The robust performance of its Concessions division and a substantial secured order book provide a degree of stability and future visibility. While the significant reduction in cash generated from operations in this quarter is a point to observe, the overall increase in profitability and EPS is encouraging.
The Group is clearly aware of the external pressures and is adopting a proactive stance by adapting its strategies and focusing on securing new projects. The positive outcome of the SCAA arbitration is a notable win, though other legal matters remain to be resolved.
Key points to consider:
- Solid profit and EPS growth for Q1 2025, driven by the Concessions division.
- Healthy secured order book of RM1.14 billion for construction and cranes.
- Successful arbitration outcome for the SCAA claim, enhancing potential recovery.
- Challenges from global economic headwinds and ongoing litigations require close attention.
- No dividend was declared for the period, aligning with the Group’s focus on navigating current market conditions.
From my perspective, Muhibbah Engineering’s Q1 2025 results demonstrate a focused effort to maintain profitability and secure future business amidst a volatile global environment. The company’s strategic emphasis on monitoring and adapting to market shifts, coupled with its substantial order book, suggests a pragmatic approach to navigating the current landscape.
What are your thoughts on Muhibbah Engineering’s performance this quarter? Do you think the company can maintain this growth momentum in the face of ongoing global challenges? Share your views in the comments below!
Stay tuned for more insights into the Malaysian market and company performances. For more related analyses, check out our other articles on [Related Article 1] and [Related Article 2].
