Navigating Headwinds: A Deep Dive into V.S. Industry Berhad’s Q3 FY2025 Performance
Malaysia’s manufacturing giant, V.S. Industry Berhad (VS Industry), has just released its unaudited interim financial report for the third quarter ended 30 April 2025. This report offers a crucial glimpse into the company’s performance amidst a challenging global economic landscape. While the numbers reflect the prevailing market conditions, the report also highlights the strategic measures VS Industry is undertaking to ensure long-term resilience. Let’s break down the key takeaways from this latest financial disclosure.
Core Data Highlights: A Mixed Bag
The third quarter of FY2025 presented a mixed picture for VS Industry. While revenue saw a dip compared to the same period last year, the company managed to improve its profit before tax (PBT) on a quarter-on-quarter basis, signaling some operational improvements. However, the cumulative nine-month performance indicates the persistent challenges faced throughout the financial year.
Quarter-on-Quarter Performance (Q3 FY2025 vs Q3 FY2024)
Q3 FY2025
Revenue: RM909.4 million
Profit Before Tax (PBT): RM35.6 million
Profit Attributable to Owners: RM23.8 million
Basic Earnings Per Share (EPS): 0.62 sen
Q3 FY2024
Revenue: RM1,010.4 million
Profit Before Tax (PBT): RM74.8 million
Profit Attributable to Owners: RM54.4 million
Basic Earnings Per Share (EPS): 1.43 sen
For the current quarter, revenue decreased by 10.0% or RM101.0 million compared to the previous year’s corresponding quarter. Profit before tax (PBT) also saw a significant reduction of 52.5% or RM39.2 million over the same period. The report attributes these declines primarily to lower sales orders from existing customers, coupled with higher operating expenses and unfavorable foreign exchange rates.
Cumulative Nine-Month Performance (9M FY2025 vs 9M FY2024)
Looking at the nine-month period, the overall trend reflects similar pressures:
| Metric | 9M FY2025 (RM’000) | 9M FY2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 2,929,043 | 3,034,743 | -3.5% |
| Profit Before Tax | 105,570 | 163,910 | -35.6% |
| Profit Attributable to Owners | 69,749 | 119,408 | -41.6% |
| Basic Earnings Per Share (sen) | 1.80 | 3.11 | -42.1% |
The cumulative revenue for the nine months ended 30 April 2025 was RM2,929.0 million, down from RM3,034.7 million in the previous corresponding period. PBT stood at RM105.6 million, a 35.6% decrease. A significant factor contributing to the reduced earnings was a net foreign exchange loss of RM1.5 million for the cumulative quarters, a stark contrast to a net gain of RM28.6 million in the corresponding period last year.
Segmental Performance: A Closer Look
VS Industry operates across several geographical segments, each contributing differently to the overall performance:
- Malaysia Segment: For the current quarter, Malaysia’s revenue saw a slight decrease. However, for the cumulative nine months, this segment posted a 6.0% increase in revenue, primarily driven by higher sales orders in the first half of the financial year. Despite the revenue growth, profit before tax for the Malaysian operations dropped by 45.7% (Q3) and 31.6% (9M) due to unfavorable foreign exchange rates, higher labor costs, and overall increased operating expenses.
- Singapore Segment: Acting as the marketing arm for Malaysian operations, the Singapore segment recorded a profit before tax for the current quarter. However, on a cumulative basis, lower profit before tax was generated in line with the decrease in orders delivered.
- Indonesia Segment: This segment faced a challenging period, incurring a loss for both the current quarter and cumulative quarters due to reduced orders from customers.
- Philippines Operations: A positive development is the recent commencement of mass production in the Philippines, with the utilization rate expected to gradually increase towards the end of the year. This could provide a new growth avenue for the Group.
Financial Health and Cash Flow
From a balance sheet perspective, as at 30 April 2025, total assets stood at RM3,742.1 million, down from RM4,077.8 million at 31 July 2024. Total equity also saw a decrease to RM2,187.8 million from RM2,292.6 million. Net assets per share slightly declined to RM0.57 from RM0.59.
On the cash flow front, the Group reported a net cash generated from operating activities of RM314.3 million for the nine months ended 30 April 2025, a healthy increase from RM231.1 million in the same period last year. This indicates strong operational cash generation despite the lower profits. However, net cash used in investing activities was RM87.6 million, primarily for the acquisition of property, plant, and equipment. Net cash used in financing activities amounted to RM144.4 million, which included dividend payments and share repurchases.
Total borrowings and debt securities decreased slightly to RM893.4 million as at 30 April 2025 from RM908.1 million at 31 July 2024. Notably, US Dollar denominated borrowings increased to RM186.4 million (from RM135.4 million), which could expose the company to further foreign exchange fluctuations.
Strategic Outlook and Future Prospects
The report acknowledges the challenging global business landscape, citing subdued consumer sentiment, inflationary pressures, and geopolitical tensions as significant headwinds. A new factor impacting the near term is the revised tariff measures announced in early April 2025, which led to certain customers adjusting their orders. The overall order flow situation in Malaysia and Singapore is expected to remain contingent on prevailing consumer sentiments and the evolving tariff measures, especially as the 90-day grace period expires in early July 2025.
Despite these external challenges, VS Industry remains proactive. The Group is actively engaged with its customers on new product development programs and continues to pursue opportunities for recovery in the coming quarters, anticipating new model launches by some of its key customers. The ramp-up of mass production in the Philippines also offers a promising new revenue stream.
The management remains positive on the Group’s long-term outlook, underpinned by several key strengths: a resilient customer base, strong vertical integration capabilities, sound financial fundamentals, and prudent cost and risk management.
Dividends: Returning Value to Shareholders
VS Industry continued its commitment to shareholder returns. The company announced a distribution of treasury shares as a share dividend on the basis of one (1) treasury share for every one hundred twenty-five (125) ordinary shares held on 30 June 2025 for the financial year ending 31 July 2025. In terms of cash dividends, the total dividend per share for the current financial year-to-date is 0.8 sen, compared to 1.0 sen in the previous year’s corresponding period.
Summary and Outlook
V.S. Industry Berhad’s Q3 FY2025 report paints a picture of a company navigating a complex global economic environment. While the financial performance for the nine-month period reflects reduced earnings due to lower orders, higher costs, and unfavorable foreign exchange, the latest quarter showed some signs of operational improvement with a quarter-on-quarter increase in PBT. The company’s strategic focus on new product development, expansion into new markets like the Philippines, and its inherent strengths in vertical integration and financial prudence position it to weather these storms.
Key risk points highlighted in the report and worth monitoring include:
- The ongoing impact of subdued global consumer sentiment and inflationary pressures on demand.
- Potential disruptions from geopolitical tensions.
- The evolving effects of new tariff measures on customer order patterns.
- Further volatility from unfavorable foreign exchange rates.
- The ability to manage rising labor and overall operating costs effectively.
- The challenge of securing consistent orders across all operational segments, particularly in Indonesia.
Despite these challenges, the company’s long-term outlook remains positive, supported by its strong fundamentals and proactive management strategies. The ability to generate robust cash flow from operations is a notable positive, providing a buffer against current headwinds and supporting future investments.
What are your thoughts on VS Industry’s ability to navigate these global headwinds and capitalize on new opportunities? Share your insights in the comments section below!
