Greetings, fellow investors! Today, we’re diving into the latest quarterly report from a prominent Malaysian company, revealing a mixed bag of results that warrant our attention. While the company managed to grow its revenue, a significant drop in profitability signals underlying challenges. Let’s unpack the numbers and understand what this means for the company’s trajectory, especially with the announcement of a final dividend of 1.0 sen per share for the financial year.
Q4 Performance: Revenue Up, Profits Down
The final quarter of the financial year saw the company achieve a modest increase in revenue, primarily driven by stronger sales within its food and beverage business. However, this top-line growth was overshadowed by a substantial decline in profitability, reflecting the pressures of a challenging operating environment. All figures are in Ringgit Malaysia thousands (RM ‘000) unless otherwise stated.
Current Quarter (Q4 2023)
Revenue: RM 250,147
Profit Before Tax (PBT): RM 5,160
Net Profit: RM 3,923
Earnings Per Share (EPS): 0.81 sen
Previous Year (Q4 2022)
Revenue: RM 247,654
Profit Before Tax (PBT): RM 14,034
Net Profit: RM 11,407
Earnings Per Share (EPS): 2.37 sen
On a quarter-on-quarter (QoQ) basis, revenue edged up by 1.0% from RM247.654 million in Q4 2022 to RM250.147 million in Q4 2023. This positive movement at the top line is a good sign of continued sales momentum. However, the Profit Before Tax (PBT) plummeted by a significant 63.2%, from RM14.034 million to RM5.160 million. Consequently, Net Profit saw an even sharper decline of 65.6%, falling from RM11.407 million to RM3.923 million. This substantial profit erosion is primarily attributed to higher operating costs, including rising raw material prices, utility expenses, and labor costs.
Full Year Performance: Modest Revenue Growth, Profit Contraction
Looking at the full financial year, the trends observed in Q4 largely reflect the overall performance. While revenue showed a slight improvement, profitability faced headwinds from elevated operational expenditures.
| Metric | FY 2023 (RM ‘000) | FY 2022 (RM ‘000) | Change (%) |
|---|---|---|---|
| Revenue | 978,749 | 965,250 | +1.4% |
| Profit Before Tax | 48,167 | 57,705 | -16.5% |
| Net Profit | 36,273 | 44,240 | -18.0% |
For the full financial year, revenue increased by 1.4% to RM978.749 million, up from RM965.250 million in the previous year. This consistent revenue growth, again driven by the food and beverage sector, indicates a resilient market demand for the company’s products. However, similar to the quarterly performance, full-year PBT decreased by 16.5%, and Net Profit declined by 18.0%. This highlights that while the company can generate sales, managing its cost base in the current economic climate remains a critical challenge.
Financial Health Check: Balance Sheet and Cash Flow
Beyond the income statement, a look at the balance sheet and cash flow statement provides deeper insights into the company’s financial health and liquidity position.
Balance Sheet Snapshot
The company’s balance sheet shows a slight increase in total assets, but a modest decline in equity, while liabilities have grown. This indicates a shift in the capital structure, with a greater reliance on debt or payables.
| Item | Current Year (RM ‘000) | Last Year (RM ‘000) | Change (%) |
|---|---|---|---|
| Total Assets | 811,104 | 799,780 | +1.4% |
| Total Equity | 442,308 | 455,642 | -2.9% |
| Total Liabilities | 368,796 | 344,138 | +7.2% |
| Cash and Bank Balances | 30,128 | 48,229 | -37.5% |
Notably, cash and bank balances saw a significant reduction of 37.5%, dropping from RM48.229 million to RM30.128 million. This substantial decrease in cash holdings is a key point to monitor, as it directly impacts the company’s short-term liquidity.
Cash Flow Dynamics
The cash flow statement further illuminates the company’s liquidity challenges, particularly from its core operations.
| Cash Flow Category | Current Year (RM ‘000) | Last Year (RM ‘000) | Impact |
|---|---|---|---|
| Net Cash from Operating Activities | (10,885) | 7,506 | Shift to significant outflow |
| Net Cash from Investing Activities | (2,133) | (1,128) | Increased outflow |
| Net Cash from Financing Activities | (5,063) | (16,463) | Reduced outflow, partly due to lower dividends paid |
| Net Decrease in Cash and Equivalents | (18,081) | (10,085) | Larger decrease |
A critical observation is the shift in net cash from operating activities, which turned into a significant outflow of RM10.885 million from an inflow of RM7.506 million in the previous year. This indicates that the company’s core business is currently consuming cash rather than generating it, likely due to increased working capital requirements and higher operational costs. While cash outflow from financing activities decreased, primarily due to lower dividend payments compared to the previous year, the overall net decrease in cash and cash equivalents
