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Navigating the Storm: BTM Resources Berhad’s Q1 2025 Performance and Strategic Pivot
Greetings, fellow investors! Today, we’re diving deep into the latest financial report from BTM Resources Berhad for the first quarter ended 31 March 2025. This report offers a crucial glimpse into the company’s current standing and its strategic direction amidst evolving market dynamics.
While the numbers reveal a challenging period marked by losses, the report also highlights significant strategic shifts, particularly concerning its energy projects. Let’s break down the key figures and what they mean for BTM Resources’ journey ahead.
A Note on Comparatives: You’ll notice “N/A” for many comparative figures in this report. This is due to BTM Resources Berhad’s recent change in its financial year end from 31 December to 30 June. As a result, preceding year corresponding quarter and year-to-date figures are not available for direct comparison. The current Year-To-Date period covers an extended 15 months (from 1 January 2024 to 31 March 2025).
Core Financial Highlights: A Mixed Bag
The first quarter of 2025 presented a tough environment for BTM Resources, primarily impacting its top and bottom lines. Let’s look at the key figures for the current quarter and the extended year-to-date period.
Quarterly Performance (Q1 2025 vs. Immediate Preceding Quarter Q4 2024)
Comparing the current quarter (31 March 2025) with the immediate preceding quarter (31 December 2024) provides a more relevant short-term trend:
Q1 2025 (31 Mar 2025)
- Revenue: RM1.02 million
- Loss After Tax (LAT): RM(2.15) million
Immediate Preceding Quarter (31 Dec 2024)
- Revenue: RM3.28 million
- Loss After Tax (LAT): RM(2.37) million
As you can see, revenue for the current quarter saw a significant dip of approximately 69% from RM3.28 million to RM1.02 million. This was primarily attributed to lower sales from wood-related activities. However, despite the revenue decline, the Group reported a *lower* Loss After Tax (LAT) of RM2.15 million, an improvement from the RM2.37 million loss in the immediate preceding quarter. This improvement in loss was mainly due to higher operating expenses incurred in the latter quarter.
Year-To-Date Performance (15 Months ended 31 March 2025)
For the extended 15-month year-to-date period, BTM Resources recorded:
| Metric | Amount (RM’000) |
|---|---|
| Revenue | 7,185 |
| Gross Loss | (1,544) |
| Loss Before Taxation | (7,688) |
| Loss For The Period | (7,688) |
| Basic Loss Per Share (sen) | (0.61) |
The substantial year-to-date loss reflects the persistent challenges faced by the Group, including the operational costs and the impact of the strategic recalibrations discussed later.
Financial Health Check: Balance Sheet & Cash Flow
Understanding the balance sheet and cash flow provides a holistic view of the company’s financial resilience.
Balance Sheet Snapshot (As at 31 March 2025 vs. 31 December 2023)
The Group’s financial position saw some notable shifts since the last audited financial statements (31 December 2023):
- Total Assets: Decreased from RM98.16 million to RM80.18 million. This reduction was primarily driven by a decrease in Property, Plant and Equipment (from RM26.11 million to RM18.44 million) and a significant drop in Fixed Deposits with licensed banks (from RM10.44 million to RM0.27 million). However, Cash and Bank Balances saw an increase from RM19.41 million to RM22.12 million.
- Total Equity: Declined from RM73.62 million to RM65.93 million, mainly due to the accumulated losses during the period. The Warrants reserve also decreased as a portion was transferred to accumulated losses upon maturity of Warrants-B.
- Total Liabilities: Saw a healthy reduction from RM24.55 million to RM14.25 million. This was largely due to significant repayments of Term Loan (from RM3.08 million to RM0) and a decrease in Other Payables, Deposits and Accruals (from RM14.13 million to RM11.82 million), as well as Amount Due to Directors (from RM2.71 million to RM0.48 million).
The reduction in liabilities, particularly the term loan, indicates an effort to de-leverage, which is a positive sign for financial stability.
Cash Flow Dynamics (Year-To-Date 31 March 2025)
Cash flow analysis reveals the sources and uses of funds:
- Operating Activities: The Group recorded a net cash outflow of RM(9.73) million from operating activities, reflecting the overall loss before taxation and changes in working capital.
- Investing Activities: A significant net cash inflow of RM5.98 million was generated from investing activities. This was largely boosted by proceeds from the disposal of a subsidiary company (RM1.00 million) and the disposal of an asset held for sale (RM5.20 million), partially offset by adjustments and purchases of right-of-use assets.
- Financing Activities: The Group generated a net cash inflow of RM6.46 million from financing activities. A major contributor here was the withdrawal of fixed deposits pledged (RM10.48 million), which more than offset the repayments of term loans and lease liabilities.
The net effect of these activities resulted in a positive change in cash and cash equivalents of RM2.71 million, bringing the total cash and cash equivalents to RM22.12 million at the end of the period.
Strategic Shifts, Risks, and Future Prospects
BTM Resources is at a pivotal juncture, making crucial strategic decisions to navigate its future path.
A Strategic Reassessment of Biomass Power
A major development is the relinquishment of the Feed-in Approval for the 10MW biomass power plant project (BTMBP) and the mutual termination of its EPCC agreement. This decision, which effectively closes this corporate proposal, was made after reassessing the project’s viability. Key factors included market uncertainties, raw material price volatility, and the availability of favorable financing sources. This move, while seemingly a step back, reflects a pragmatic approach to capital allocation and risk management.
However, the Group still holds an 8MW FiT approval for another biomass project under BTM Land Sdn Bhd, though its commencement date has been extended to November 2026. This indicates a cautious, but not complete, withdrawal from the renewable energy sector.
Focusing on the Core and Exploring New Horizons
Currently, and for the foreseeable future, BTM Resources remains heavily reliant on its core business of timber-related products. This includes sawmilling, trading in sawn timbers, plywood, logs, timber moulding, and manufacturing of finger-jointed timber and biomass wood pellets.
Despite this focus, the company acknowledges significant challenges. The scarcity of raw materials and their price volatility, coupled with global economic conditions impacting demand for timber products, are expected to pose ongoing hurdles.
In response, the Group aims to strengthen its capabilities in timber manufacturing and trading. Crucially, it is also actively exploring new revenue-generating opportunities through strategic acquisitions, with a stated goal of repositioning itself as a forward-looking and diversified business. This indicates a proactive stance to mitigate risks associated with its traditional business and seek new growth engines.
Outlook for the Current Financial Year
Given the prevailing market conditions and the strategic adjustments, the Board anticipates that the financial results for the current financial year ending 30 June 2025 will remain challenging.
Summary and Outlook
BTM Resources Berhad’s Q1 2025 report paints a picture of a company undergoing significant transformation. While the financial performance reflects the headwinds in its core timber business and the costs associated with strategic realignments, the proactive steps taken to address these challenges are noteworthy.
The decision to cease the 10MW biomass project demonstrates a willingness to cut losses and re-evaluate strategic priorities. The focus on strengthening the core timber business, coupled with an active pursuit of diversification through strategic acquisitions, positions the company for a potentially stronger future, albeit one that will require careful execution amidst a challenging economic landscape.
Key points from this report include:
- Financial Headwinds: The Group recorded losses for the quarter and year-to-date, primarily due to lower timber sales and operational expenses.
- Strategic Re-evaluation: The termination of the 10MW biomass power plant project signifies a pragmatic shift in capital allocation and risk management.
- Balance Sheet De-leveraging: A notable reduction in total liabilities, particularly term loans, improves the company’s financial structure.
- Cash Flow Management: Despite operating losses, positive cash flows from investing (asset disposals) and financing activities led to an increase in cash and cash equivalents.
- Future Focus: The company aims to bolster its timber operations and explore new revenue streams through strategic acquisitions, signaling a push towards diversification.
The path ahead will undoubtedly be challenging, but BTM Resources appears to be laying the groundwork for a more focused and potentially diversified future. Their ability to execute on these new strategies will be key to their long-term success.
