Curious about how a Malaysian company navigates challenging economic currents? FACB Industries Incorporated Berhad (FACB), a diversified group primarily known for its bedding operations, has just released its unaudited financial results for the third quarter ended 31 March 2025. This report offers a glimpse into the company’s performance, revealing a mixed bag of revenue contraction when compared to the previous year, yet showing a notable sequential improvement in profitability. Let’s dive into the details to understand the underlying trends and what the future might hold for FACB.
FACB Industries Incorporated Berhad’s Q3 FY2025 results show a decline in revenue and profit when compared to the same period last year and on a year-to-date basis. However, the company achieved a significant 44.1% increase in Profit Before Tax (PBT) compared to the immediate preceding quarter, signaling a positive sequential turnaround. Despite market challenges, the Group maintains a robust financial position with no borrowings and stable net assets per share, while proactively implementing strategies to enhance sales and brand awareness.
Core Data Highlights: Unpacking the Numbers
To truly understand FACB’s performance, we need to look at the numbers from various angles:
Quarterly Performance: Q3 FY2025 vs. Q3 FY2024
Comparing the latest quarter with the same quarter last year, FACB experienced a contraction in its top and bottom lines:
Q3 FY2025
Revenue: RM 8,983 thousand
Profit Before Tax: RM 2,048 thousand
Net Profit for the Period: RM 1,704 thousand
Earnings per Share: 1.88 sen
Q3 FY2024
Revenue: RM 11,692 thousand
Profit Before Tax: RM 2,352 thousand
Net Profit for the Period: RM 1,839 thousand
Earnings per Share: 1.89 sen
Revenue saw a decrease of 23.2%, primarily due to lower sales from the Malaysian bedding operation. Consequently, Profit Before Tax declined by 12.9%, and Net Profit for the period by 7.3%. Earnings per share remained relatively stable, with a marginal decrease of 0.5%.
Year-to-Date Performance: 9 Months FY2025 vs. 9 Months FY2024
The cumulative nine-month performance reflects similar trends of contraction:
9 Months FY2025
Revenue: RM 25,773 thousand
Profit Before Tax: RM 4,211 thousand
Net Profit for the Period: RM 3,265 thousand
Earnings per Share: 3.56 sen
9 Months FY2024
Revenue: RM 36,426 thousand
Profit Before Tax: RM 6,439 thousand
Net Profit for the Period: RM 4,932 thousand
Earnings per Share: 5.15 sen
For the nine-month period, revenue decreased by 29.3%, and Profit Before Tax by 34.6%. The main reasons cited were lower consumer sales in the Malaysian bedding operation and a higher sales mix of products with lower gross profit margins. Additionally, associates in China recorded lower net profit primarily due to reduced operating margins.
Sequential Quarter Performance: Q3 FY2025 vs. Q2 FY2025
Despite the year-on-year decline, the sequential performance from the immediate preceding quarter (Q2 FY2025) shows a positive rebound:
Q3 FY2025
Revenue: RM 8,983 thousand
Profit Before Tax: RM 2,048 thousand
Q2 FY2025
Revenue: RM 8,254 thousand
Profit Before Tax: RM 1,421 thousand
Revenue improved by 8.8% quarter-on-quarter, and Profit Before Tax surged by a significant 44.1%. This improvement was largely driven by higher consumer sales and better profit margins within the Malaysian bedding segment, indicating some recovery from the previous quarter’s performance.
Financial Health: A Solid Foundation
FACB continues to boast a strong balance sheet. As at 31 March 2025, the Group reported no borrowings, underscoring its financial prudence. While total assets saw a slight decrease, the net assets per share remained stable at RM 2.60. The Group also saw a strategic increase in financial assets at amortised cost, indicating a shift in how its substantial cash reserves are being managed.
| Financial Metric | As at 31 March 2025 (RM’000) | As at 30 June 2024 (RM’000) |
|---|---|---|
| Total Assets | 240,951 | 243,901 |
| Total Equity | 233,294 | 234,062 |
| Total Liabilities | 7,657 | 9,839 |
| Deposits, Cash & Bank Balances | 148,685 | 160,948 |
| Financial Assets at Amortised Cost | 40,473 | 29,816 |
Cash Flow: A Point of Attention
The cash flow statement reveals that net cash used in operating activities increased significantly to RM 5.09 million for the nine-month period (compared to RM 0.71 million used in the same period last year). This resulted in an overall net decrease in cash and cash equivalents of RM 2.91 million for the period, compared to an increase of RM 7.50 million in the prior year’s corresponding period. This indicates that while the company is profitable, its operational activities are consuming more cash, a trend worth monitoring.
Risks and Prospects: Navigating the Headwinds
FACB acknowledges that the financial year ending 30 June 2025 is expected to remain challenging. Key factors contributing to this outlook include the persistent higher cost of living, which impacts consumer spending, and a sluggish global economy, exacerbated by ongoing international trade tensions, such as the US reciprocal tariff threat. These external pressures directly affect consumer confidence and demand for products like bedding.
However, the Group is not passively weathering the storm. In a proactive move, FACB has initiated a new strategy to set up its own retail outlets. This direct-to-consumer (D2C) approach aims to reach consumers directly, build stronger brand awareness, and ultimately improve sales performance. This strategic pivot could be crucial in mitigating the impact of external challenges and regaining market momentum.
It’s also worth noting the deregistration of Dreamland Shanghai Pte. Ltd., a 40% owned associate, during the quarter. This entity had been dormant, and its deregistration is not expected to have any material effect on the Group’s earnings per share, gearing, or net assets per share.
Summary and
FACB Industries Incorporated Berhad’s latest quarterly report paints a picture of a company facing significant external headwinds, as evidenced by the year-on-year and year-to-date declines in revenue and profitability. The lower consumer sales and shifts in product mix within its core bedding operations in Malaysia, coupled with reduced operating margins from its China associates, highlight the challenging market environment.
However, the sequential quarter improvement in Profit Before Tax signals a positive operational recovery and management’s efforts to enhance profitability. The Group’s strong financial position, marked by zero borrowings and stable net assets, provides a robust foundation to navigate these challenges. Furthermore, the strategic initiative to establish direct-to-consumer retail outlets demonstrates a proactive and forward-thinking approach to drive future growth and build brand resilience.
While the path ahead remains challenging, the company’s solid financial health and strategic adaptations offer reasons for cautious optimism.
Key points to consider moving forward:
- The persistent impact of a higher cost of living on consumer discretionary spending, particularly for products like bedding.
- The broader implications of a sluggish global economy and ongoing geopolitical trade tensions, which could affect overall market demand.
- The effectiveness of the new direct-to-consumer retail strategy in offsetting revenue declines and improving overall sales.
- The trend of cash flow from operations, as a significant increase in cash used in operations warrants close monitoring.
While the year-on-year figures present a challenging picture, the sequential quarter improvement and the strategic pivot towards direct consumer engagement show management’s proactive stance in a tough market. It will be interesting to see how these initiatives unfold in the coming quarters.
What are your thoughts on FACB Industries’ strategy to open its own retail outlets? Do you believe this direct-to-consumer approach can effectively counter the current market headwinds and drive future growth?
Share your views in the comment section below! For more in-depth analyses of Malaysian companies, be sure to check out our other articles.
