JHM CONSOLIDATION BERHAD: Navigating Growth and Challenges in Q1 2025
Greetings, fellow investors! Today, we’re diving into the latest financial report from JHM CONSOLIDATION BERHAD for the first quarter ended 31 March 2025. This report offers a fascinating glimpse into the company’s performance, revealing a significant rebound in revenue and a notable reduction in losses compared to the same period last year. However, it also highlights the short-term impact of strategic investments and external factors like foreign exchange movements. Let’s unpack the numbers and understand what’s driving JHM’s trajectory.
The headline? JHM recorded a substantial 33.09% increase in revenue and a more than 50% reduction in losses compared to the first quarter of the previous year. This impressive turnaround is largely fueled by a recovery in the automotive segment.
Q1 2025 Performance: A Promising Turnaround
JHM CONSOLIDATION BERHAD delivered a robust top-line performance in Q1 2025, with revenue climbing significantly. This growth signals a positive shift, especially when compared to the same period last year.
Revenue and Profitability – Current Quarter vs. Corresponding Quarter Last Year
Q1 2025
Revenue: RM64.60 million
Gross Profit: RM5.31 million
Operating Loss: RM1.68 million
Loss Before Tax: RM1.68 million
Loss After Tax: RM2.28 million
Basic Loss Per Share: 0.32 sen
Q1 2024
Revenue: RM48.54 million
Gross Profit: RM0.10 million
Operating Loss: RM3.74 million
Loss Before Tax: RM4.07 million
Loss After Tax: RM4.70 million
Basic Loss Per Share: 0.78 sen
The numbers speak volumes: Revenue surged by RM16.06 million, a remarkable 33.09% increase. This was primarily driven by a recovery in the automotive segment, where customers began pulling in previously delayed projects. While the Group still reported a loss, the significant reduction across all key profitability metrics is encouraging. The operating loss narrowed by 55.13% to RM1.68 million, and the loss before tax improved by 58.61% to RM1.68 million. Similarly, the loss after tax was nearly halved, reducing by 51.45% to RM2.28 million. This improvement in losses is mainly attributed to better utilization of fixed overheads as production volumes increased.
However, it’s important to note that unfavorable foreign exchange movements partially impacted the results. The Group recorded a realized forex loss of RM0.52 million in the current quarter, a stark contrast to a realized forex gain of RM1.67 million in the corresponding quarter of the previous year. This RM2.19 million negative swing in foreign exchange impact partially offset the operational improvements.
Performance Compared to Immediate Preceding Quarter (Q4 2024)
When comparing Q1 2025 to the immediate preceding quarter (Q4 2024), we see a different picture:
Q1 2025
Revenue: RM64.60 million
Operating Loss: RM1.68 million
Loss Before Tax: RM1.68 million
Loss After Tax: RM2.28 million
Q4 2024
Revenue: RM80.43 million
Operating Profit: RM0.94 million
Profit Before Tax: RM0.31 million
Profit After Tax: RM2.72 million
Revenue decreased by 19.68% from RM80.43 million in Q4 2024 to RM64.60 million in Q1 2025. This reduction was primarily due to a one-off sales event in the industrial segment during Q4 2024, which involved a strategic effort to reduce inventory holdings for a key industrial customer. Operating performance also shifted from a profit of RM0.94 million in Q4 2024 to a loss of RM1.68 million in Q1 2025. This downturn was influenced by increased operational costs, notably the implementation of the minimum wage policy (RM1,500 to RM1,700) effective February 1, 2025. Additionally, the company expanded its workforce and resources in anticipation of onboarding new automotive customers, contributing to higher short-term operational expenses.
Foreign exchange movements also played a role. In Q1 2025, the company recorded a net forex loss of RM0.22 million, contrasting sharply with a total forex gain of RM2.65 million in Q4 2024. This RM2.87 million quarter-on-quarter net change in forex impact materially contributed to the decline in profitability compared to the immediate preceding quarter.
Financial Health: Balance Sheet and Cash Flow
Let’s take a look at the company’s financial position and cash movements.
Statement of Financial Position (as at 31 March 2025 vs 31 December 2024)
| Item | 31 March 2025 (RM’000) | 31 December 2024 (RM’000) | Change (RM’000) | % Change |
|---|---|---|---|---|
| Inventories | 106,747 | 101,543 | 5,204 | +5.12% |
| Trade Receivables | 66,160 | 64,721 | 1,439 | +2.22% |
| Cash and Cash Equivalents | 48,939 | 67,493 | (18,554) | -27.49% |
| Total Borrowings | 52,819 | 44,816 | 8,003 | +17.86% |
Trade receivables saw a slight increase, while total borrowings rose by 17.86% to RM52.82 million, mainly due to drawdowns of a term loan and hire purchase facilities for expansion. Inventories also increased, which could be in anticipation of higher production volumes. Cash and cash equivalents decreased, reflecting the operational and investment activities during the quarter.
Statement of Cash Flows (Q1 2025 vs Q1 2024)
Cash flow from operations reversed from an inflow of RM22.39 million in Q1 2024 to an outflow of RM4.67 million in Q1 2025. This significant shift was mainly due to lower collections from customers compared to the prior year. Investing activities saw a net cash outflow of RM9.69 million, lower than the RM15.61 million in the same period last year, primarily due to the purchase of a factory building to support automotive segment expansion. Net cash used in financing activities decreased to RM4.24 million, partly offset by a hire purchase drawdown.
Risks and Prospects: Navigating the Future
JHM CONSOLIDATION BERHAD remains cautious in the near term. The ongoing US-China trade tensions continue to pose a potential risk to global supply chains. While the Group’s incoterms (Delivered at Place and Ex-Works) limit direct tariff impacts, the short-to-medium term implications remain uncertain.
In the automotive segment, the company anticipates future growth driven by new customers secured in February 2025. However, initial setup costs and the recent increase in minimum wages (effective February 1, 2025) have led to higher operating expenses. For the industrial segment, order volume is expected to normalize after a one-off bulk sale in Q4 2024, which created a lower base in Q1 2025.
Despite these challenges, the Group is actively focusing on efficiency, cost control, and strengthening customer relationships. Barring unforeseen circumstances, the Board expresses optimism regarding the Group’s performance for the financial year ending 31 December 2025.
Summary and
JHM CONSOLIDATION BERHAD’s Q1 2025 report paints a picture of a company making strides in revenue growth and loss reduction compared to the previous year, primarily driven by a recovering automotive sector. While the immediate preceding quarter saw a dip due to one-off sales and increased operational costs from strategic investments, the underlying trend of operational improvement and new customer acquisition is positive.
The company is clearly investing for future growth, which comes with short-term cost implications. The management’s focus on efficiency and cost control, coupled with new business in the automotive segment, provides a foundation for optimism. However, external macroeconomic factors and the initial costs of expansion will require careful monitoring.
Key points to watch include:
- The impact of US-China trade tensions on global supply chains and JHM’s business.
- The successful integration of new automotive customers and the realization of expected growth from these partnerships.
- The effectiveness of cost control measures in mitigating the impact of increased operational expenses, such as the new minimum wage policy.
- The normalization of order volumes in the industrial segment after the Q4 2024 one-off sales event.
- Fluctuations in foreign exchange rates and their potential impact on profitability.
Final Thoughts and What’s Next
JHM CONSOLIDATION BERHAD’s Q1 2025 results show a company actively adapting to market dynamics and investing in its future. The significant narrowing of losses and robust revenue growth compared to the prior year’s corresponding quarter are clear signs of operational improvements. While the immediate quarter-on-quarter comparison reveals some headwinds, these appear to be largely tied to strategic adjustments and temporary factors.
As a Malaysian retail investor, it’s crucial to consider how the company’s strategic investments in the automotive segment will translate into sustained profitability and whether their cost control measures can effectively manage the rising operational expenses. The management’s optimism for the full financial year is a positive signal, suggesting they believe the benefits of these investments will outweigh the short-term costs.
What are your thoughts on JHM’s performance this quarter? Do you think the company can maintain this growth momentum and successfully navigate the challenges in the coming quarters? Share your insights in the comments below!
