Core Data Highlights: A Mixed Bag of Performance

FCW Holdings Berhad’s Q4 FY2025 results present a nuanced story. While the group saw an increase in revenue and profit before tax for the quarter, the net profit attributable to owners dipped slightly due to higher taxation. The full-year performance, however, shows a decline in overall profitability, primarily impacted by increased finance costs and the completion of a major property phase.

Quarterly Performance (Q4 FY2025 vs Q4 FY2024)

For the quarter, revenue increased by approximately 11.7% to RM 6.84 million from RM 6.12 million. Profit Before Tax also saw a healthy rise of about 6.6% to RM 6.28 million. However, Profit After Tax from continuing operations decreased by 9.0% to RM 5.28 million, and profit attributable to owners saw a marginal decline of 4.4% to RM 6.06 million. This divergence is largely due to a significant jump in taxation, from RM 84,000 in the previous corresponding quarter to RM 993,000 in the current quarter.

Full-Year Performance (FY2025 vs FY2024)

The full financial year paints a more challenging picture, with revenue declining by nearly 8% and profit before tax seeing a substantial drop of almost 24%. This overall decline is reflected in the earnings per share attributable to owners, which fell from 9.72 sen to 7.50 sen.

Segmental Deep Dive: Where the Numbers Come From

• Contract Manufacturing: This segment showed resilience in the current quarter, with revenue increasing by 13% to RM 6.4 million, driven by stronger household spending. Profit before tax for the quarter significantly improved from RM 10,000 to RM 420,000 due to higher sales volume. However, the year-to-date revenue for this segment declined by 9.5% to RM 24.1 million, primarily due to weaker consumer spending and inflationary pressures. Despite this, year-to-date profit before tax slightly increased to RM 678,000, thanks to the strong performance in the last quarter.
• Property Development (Joint Venture): The profit after tax from the joint venture for the current quarter surged to RM 7.4 million from RM 6.3 million in the same quarter last year. This increase was mainly attributed to the reversal of unutilised accrual expenses for Phase Two of the Riana Dutamas Project. For the full year, however, profit after tax decreased to RM 19.4 million from RM 22.8 million, as contributions from Phase Two tapered off following its completion and delivery of vacant possession in the previous quarter.
• Others: This segment recorded a higher loss before tax of RM 1.5 million in the current quarter, compared to RM 374,000 in the corresponding quarter last year. The full-year loss expanded significantly to RM 1.7 million from a profit of RM 610,000 in the prior year. These losses were primarily due to increased interest expenses on bank loans taken for the acquisition of two parcels of land in Setapak.

Financial Health Check: A Shifting Landscape

The balance sheet reveals a significant expansion in the group’s asset base, driven by strategic land acquisitions. Total assets swelled from RM 259.9 million to RM 399.7 million, a substantial increase of over 53%. This growth is largely attributable to new assets like “Land Held For Development” (RM 80.6 million) and “Property Development Cost” (RM 77.3 million), indicating a clear strategic focus on expanding its property development pipeline.

To fund this expansion, the group significantly increased its borrowings. Non-current liabilities, specifically loans and borrowings, jumped from RM 2.8 million to RM 125.7 million. This substantial increase in debt naturally led to higher finance costs, as observed in the “Others” segment’s performance.

Despite the increased leverage, the group’s cash and cash equivalents remained healthy, closing the period at RM 79.6 million, up from RM 36.1 million a year ago. While cash used in operating activities increased significantly, robust cash generation from financing activities, primarily from new term loans and shareholder advances, ensured a strong cash position.

Risk and Prospect Analysis: Navigating the Future

FCW Holdings is clearly making strategic moves, but these come with their own set of challenges and opportunities:

• Contract Manufacturing: The outlook for this division remains pressured by prolonged weak economic conditions and persistent inflation. This environment is expected to continue impacting sales volumes and compressing profit margins. The group will need to focus on operational efficiencies and cost management to mitigate these headwinds.
• Property Development: With Phase 2 of Riana Dutamas completed, the focus shifts to new projects. The group launched Phase 3 in February 2025, signaling its commitment to this segment. Despite the challenging economic environment for property, the group remains cautiously optimistic, banking on its expanded land bank for future growth. The successful execution and sales of these new projects will be crucial for the segment’s performance.
• Finance Costs: The significant increase in borrowings to fund land acquisitions means higher interest expenses will continue to weigh on the group’s profitability, particularly in the “Others” segment, until these new property projects begin generating substantial returns.

The company’s strategy appears to be a long-term play, investing heavily in land for future property development. This positions them for potential growth when market conditions improve, but it also exposes them to risks associated with the property market’s cyclical nature and interest rate fluctuations.