TDM BERHAD Q1 2025: Navigating Headwinds with Strategic Shifts
Another quarter, another look into the financial pulse of Malaysia’s corporate landscape! Today, we’re diving into the recently released Q1 2025 Interim Financial Statements of TDM BERHAD (Company No 196501000477 (6265-P)), a diversified Malaysian group with significant interests in both the plantation and healthcare sectors.
This report reveals a challenging quarter for TDM, marked by a decline in overall revenue and a notable increase in losses. However, it also highlights the company’s proactive strategic moves, including the ongoing divestment of its Indonesian plantation assets and exciting new developments in its healthcare division. Despite the immediate headwinds, TDM also announced an interim dividend for FY2024, signaling its commitment to shareholder returns.
Let’s unpack the numbers and understand the forces shaping TDM’s performance.
Q1 2025 Financial Performance: A Closer Look
TDM Berhad faced a tough start to the year, reporting a decline in revenue and a significant increase in its loss before tax for the first quarter ended 31 March 2025, compared to the same period last year.
Q1 2025 (Reporting Period)
Revenue (Continuing Operations): RM130.18 million
Loss Before Tax (Continuing Operations): RM22.42 million
Loss for the Financial Period: RM16.72 million
Loss Attributable to Owners: RM17.66 million
Basic Loss Per Share: 1.02 sen
Q1 2024 (Comparison Period)
Revenue (Continuing Operations): RM135.08 million
Loss Before Tax (Continuing Operations): RM5.92 million
Loss for the Financial Period: RM8.07 million
Loss Attributable to Owners: RM8.96 million
Basic Loss Per Share: 0.52 sen
Overall, the Group’s revenue from continuing operations decreased by 4% year-on-year (YoY) to RM130.18 million. More critically, the loss before tax from continuing operations widened substantially to RM22.42 million, a 3.8 times increase compared to the RM5.92 million loss recorded in Q1 2024. This resulted in a basic loss per share of 1.02 sen, up from 0.52 sen in the prior year’s corresponding quarter.
It’s worth noting that the Group also recorded a profit of RM4.43 million from its discontinued operations in Q1 2025, a positive swing from a loss of RM0.61 million in Q1 2024. This helped to partially mitigate the overall loss for the financial period.
Segmental Performance: Mixed Fortunes
Plantation Division
The Plantation Division experienced a slight revenue decline of 2% YoY to RM49.61 million. This was primarily driven by lower sales volumes of Crude Palm Oil (CPO) and Palm Kernel (PK), which decreased by 22% and 14% respectively, despite higher average selling prices for both commodities (+21% for CPO, +59% for PK). Fresh Fruit Bunch (FFB) production also saw a significant 27% drop. This led to a substantial 76% reduction in EBITDA and a widened loss before tax for the division.
| Plantation Statistics | Q1 2025 | Q1 2024 | Changes (%) |
|---|---|---|---|
| CPO sales volume (mt) | 8,717 | 11,176 | -22% |
| PK sales volume (mt) | 2,058 | 2,382 | -14% |
| FFB production (mt) | 42,099 | 57,991 | -27% |
| CPO average price (RM) | 4,888 | 4,031 | +21% |
| PK average price (RM) | 3,770 | 2,376 | +59% |
Healthcare Division
The Healthcare Division’s revenue decreased by 5% YoY to RM80.57 million. The decline was largely attributed to a reduction in key operating metrics, including a 20% drop in occupancy rate, 9% fewer inpatients, and 7% fewer outpatients. Consequently, the division’s EBITDA fell by 63%, shifting from a profit before tax of RM5.7 million in Q1 2024 to a loss before tax of RM0.8 million in the current quarter.
| Healthcare Statistics | Q1 2025 | Q1 2024 | Changes (%) |
|---|---|---|---|
| Number of inpatient | 5,768 | 6,354 | -9% |
| Number of outpatient | 40,898 | 43,827 | -7% |
| Inpatient days | 14,579 | 17,701 | -18% |
| Occupancy rate (%) | 51 | 64 | -20% |
Financial Health and Cash Flow
As of 31 March 2025, TDM’s total assets stood at RM1.63 billion, a slight decrease from RM1.71 billion at the end of 2024. Total liabilities also decreased to RM968.82 million from RM1.02 billion. The Group’s total equity was RM665.78 million, down from RM688.10 million.
In terms of cash flow, TDM utilized RM22.75 million in operating activities, RM2.63 million in investing activities, and RM18.65 million in financing activities during Q1 2025. Cash and cash equivalents at the end of the period were RM55.71 million.
Despite the challenging quarter, TDM demonstrated its commitment to shareholders by paying an interim dividend of 0.25 sen per ordinary share for the financial year ended 31 December 2024, amounting to RM4.31 million, on 27 March 2025.
Risks and Prospects: Navigating the Road Ahead
Malaysian Plantation Division Outlook
The Malaysian palm oil sector experienced a 6% YoY drop in production in Q1 2025, largely due to the lagging effects of the El Nino weather phenomenon. While CPO prices saw an increase in March 2025 due to low stock levels, the outlook for Q2 2025 suggests diminishing strength, with CPO expected to trade between RM3,800 and RM4,300 per tonne. This is attributed to seasonal production improvements, an absence of festive demand, and weakening crude oil prices.
On a brighter note, escalating US-China trade tensions could indirectly benefit Malaysian palm oil, as China may seek to reduce reliance on US soybean imports by partially replacing them with palm oil. Furthermore, robust demand from key importing markets like India, Pakistan, and the Middle East is expected to persist. Indonesia’s B40 biodiesel mandate is also anticipated to keep palm oil prices elevated by reducing Indonesian palm oil exports.
Divestment of Indonesia Plantation Division
The divestment of PT Rafi Kamajaya Abadi (PT RKA) and PT Sawit Rezki Abadi (PT SRA) continues, with the fulfillment of Condition Precedents extended to 30 June 2025. This strategic move aims to streamline TDM’s portfolio. It’s important to note the ongoing material litigation involving PT RKA related to a fire incident in 2019, with a judicial review of a Supreme Court decision still pending.
Healthcare Division Outlook
The Healthcare Division’s Q1 2025 performance was significantly impacted by the Ramadan month, which is typically a low revenue period. This trend is expected to continue into early Q2 2025 due to the Hari Raya festive season, with performance anticipated to recover in subsequent quarters. The division also faces persistent cost pressures, necessitating stricter cost control and a drive for operational efficiency.
Potential external challenges include the impact of US Government tariff escalation on the local healthcare industry’s profitability margins and regulatory moves towards Diagnostics-Related Group pricing. Despite these challenges, TDM is actively pursuing growth through new hospital developments in Tawau and Bertam. These new facilities are strategically located in low-competition environments and are expected to significantly accelerate revenue growth for the Group.
Summary and Outlook
TDM Berhad’s Q1 2025 results reflect a challenging operating environment, particularly for its core businesses. The Plantation Division grappled with lower production and sales volumes, while the Healthcare Division faced seasonal slowdowns and reduced patient traffic. This led to a notable increase in the Group’s overall losses for the quarter.
However, it’s crucial to view these results within the context of the company’s broader strategic trajectory. TDM is actively reshaping its portfolio through the ongoing divestment of its Indonesian plantation assets, which, despite legal complexities and extended timelines, aims to unlock value and focus resources. Simultaneously, the Group is making significant strides in expanding its Healthcare Division with new hospital developments, positioning itself for future growth in underserved markets.
While cost containment and operational efficiency will remain paramount in navigating persistent cost pressures and market volatility, TDM’s strategic initiatives suggest a forward-looking approach. The company’s ability to recover from seasonal dips in healthcare and manage CPO price fluctuations will be key determinants of its performance in the coming quarters.
Here are some key risk points to consider:
- Commodity Price Volatility: The fluctuating CPO prices and global supply-demand dynamics remain a significant factor influencing the Plantation Division’s profitability.
- Operational Headwinds in Healthcare: Sustaining patient volume, managing rising operational costs, and adapting to potential regulatory changes (like Diagnostics-Related Group pricing) will be critical for the Healthcare Division.
- Divestment Execution and Litigation: The successful and timely completion of the Indonesian plantation divestment, along with the resolution of related legal challenges, is vital for TDM’s financial restructuring.
- Seasonal Demand Swings: The impact of festive seasons on healthcare patient numbers could continue to create quarterly revenue fluctuations.
From a professional standpoint, TDM Berhad is clearly in a transitional phase, actively addressing underperforming assets while investing in future growth engines. The immediate financial performance may be concerning, but the strategic moves to divest and expand in healthcare demonstrate a clear long-term vision. The key will be in the execution of these strategies and their ability to translate into sustained profitability amidst a dynamic market.
Given the market headwinds and TDM’s strategic responses, do you believe the company can turn the tide and achieve sustained profitability in the coming quarters? Share your thoughts in the comments below!
