Navigating Headwinds: A Deep Dive into Jaycorp Berhad’s Latest Quarterly Performance
Malaysian diversified conglomerate Jaycorp Berhad (459789-X) has just released its unaudited consolidated results for the Third Financial Quarter ended 30 April 2025. This report offers a crucial glimpse into the company’s operational landscape, revealing a period marked by both strategic adjustments and the impact of broader economic challenges. While the company continues to navigate a complex market, a key highlight for shareholders is the declaration of a first single tier interim dividend of 1.5 sen per ordinary share for the current financial year.
Let’s break down the numbers and understand what’s shaping Jaycorp’s trajectory.
Overall Financial Performance: A Mixed Quarter
Jaycorp’s latest quarter, Q3 FY2025, presented a challenging financial picture compared to both the immediate preceding quarter and the same period last year. Here’s a snapshot:
Q3 FY2025 (Current Quarter)
Revenue: RM36.8 million
Profit Before Tax (PBT): RM(2.2) million (Loss)
Basic Earnings Per Share (EPS): (0.83) sen (Loss)
Q3 FY2024 (Preceding Year Corresponding Quarter)
Revenue: RM48.6 million
Profit Before Tax (PBT): RM4.8 million
Basic Earnings Per Share (EPS): 1.29 sen
Comparing Q3 FY2025 to Q3 FY2024, revenue saw a significant -24.21% decrease, falling from RM48.6 million to RM36.8 million. More notably, the Group swung from a Profit Before Tax of RM4.8 million in Q3 FY2024 to a Loss Before Tax of RM2.2 million in Q3 FY2025. This translated into a Basic EPS loss of 0.83 sen, a stark contrast to the 1.29 sen profit in the prior year’s corresponding quarter.
On a quarter-on-quarter basis (Q3 FY2025 vs Q2 FY2025), the trend also showed a decline. Revenue dropped by -20.55% from RM46.4 million in Q2 FY2025, and PBT shifted from a profit of RM5.0 million to the current quarter’s loss of RM2.2 million.
Segmental Performance: A Closer Look
Jaycorp’s diverse business units experienced varied performances, contributing to the overall decline:
| Segment | Q3 FY2025 Revenue (RM’000) | Q3 FY2024 Revenue (RM’000) | Q3 FY2025 PBT (RM’000) | Q3 FY2024 PBT (RM’000) |
|---|---|---|---|---|
| Furniture | 22,366 | 29,404 | 728 | 4,260 |
| Packaging | 7,882 | 10,449 | 207 | 776 |
| Wood Processing | 4,606 | 5,555 | (948) | 308 |
| Renewable Energy | 3,712 | 3,349 | 261 | 422 |
| Construction | 2,583 | 4,098 | (787) | 27 |
| Investment Holding | 306 | 5,181 | (918) | 4,294 |
| Others | 659 | 1,784 | (51) | 102 |
Furniture Segment: Facing Export Headwinds
As the Group’s primary revenue driver, the Furniture segment saw its revenue decline by -23.94% to RM22.4 million (Q3 FY2024: RM29.4 million). Profit Before Tax (PBT) for this segment plummeted by -82.91% to RM0.7 million (Q3 FY2024: RM4.3 million). This significant drop is attributed to decreased demand from export markets and local customers, compounded by the strengthening of the Malaysian Ringgit (MYR) against the United States Dollar (USD).
Packaging Segment: Lower Demand
The Packaging segment also experienced a downturn, with revenue falling by -24.57% to RM7.9 million (Q3 FY2024: RM10.4 million). PBT decreased by -73.32% to RM0.2 million (Q3 FY2024: RM0.8 million), primarily due to lower demand from both internal and external customers.
Wood Processing: Startup Costs and Inventory Write-downs
This segment recorded a loss before tax of RM0.9 million in Q3 FY2025, compared to a profit of RM0.3 million in Q3 FY2024. Revenue also dipped by -17.08% to RM4.6 million. The loss is attributed to lower inter-company sales to the furniture segment and external customers, coupled with higher write-downs of inventories and the initial startup costs of the newly incorporated subsidiary, Jaycorp LVL Sdn Bhd (JLVL), which is still in its nascent stage.
Renewable Energy: Higher Offtake, But Rising Costs
A brighter spot in terms of revenue, this segment saw a 10.84% increase in revenue to RM3.7 million (Q3 FY2024: RM3.3 million), driven by higher offtake from customers. However, PBT decreased by -38.15% to RM0.3 million (Q3 FY2024: RM0.4 million), impacted by higher raw material costs (especially biomass due to low crop season) and expenses related to its expansion project.
Construction: Project Delays and Margin Squeeze
The Construction segment posted a loss before tax of RM0.8 million in Q3 FY2025, a significant reversal from a profit of RM0.03 million in Q3 FY2024. Revenue also fell by -36.97% to RM2.6 million. This was due to lower percentage completion on existing and new projects, along with narrower construction margins.
Investment Holding & Joint Venture: Dividend Absence & Losses
The Investment Holding segment recorded a loss before tax of RM0.9 million, mainly due to the absence of dividend declarations from subsidiaries in Q3 FY2025 and higher impairment loss on receivables. The share of loss from joint venture companies also increased by -56.53% to RM0.7 million (Q3 FY2024: RM0.5 million loss), primarily due to losses in the Malaysian joint venture company from lower export sales, higher raw material consumption, and inventory write-downs.
Financial Health Snapshot
As of 30 April 2025, Jaycorp maintained a treasury share position of 5,766,600 ordinary shares. The company’s total borrowings stood at RM11.914 million, with RM6.942 million classified as current and RM4.972 million as non-current. Capital commitments for property, plant, and equipment amounted to RM3.57 million, indicating ongoing investments in its operational assets. The company also reported contingent liabilities of RM101.989 million in corporate guarantees for banking facilities to subsidiaries and joint ventures.
A final single tier dividend of 2 sen per ordinary share for FY2024, amounting to RM5.375 million, was paid on 30 December 2024. Looking ahead, the Board has declared a first single tier interim dividend of 1.5 sen per ordinary share for the financial year ending 31 July 2025, payable on 30 July 2025, with an entitlement date of 16 July 2025.
Navigating the Future: Risks and Prospects
Jaycorp acknowledges the challenging global and domestic economic landscape. The global growth outlook remains clouded by recent US tariff measures, retaliatory actions, ongoing trade negotiations, geopolitical tensions, and volatility in global financial markets. These external factors inevitably impact export-oriented businesses like Jaycorp’s furniture segment.
Domestically, while the Malaysian economy continues to expand driven by sustained demand, downside risks persist. These include potential economic slowdowns in major trading partners and heightened uncertainties that could affect business and consumer spending.
Furthermore, local operational costs are set to rise significantly:
- The minimum wage increase to RM1,700, effective 1 February 2025, will directly impact labour costs.
- An electricity tariff hike, effective 1 July 2025, will increase utility expenses.
- The introduction of a mandatory 2% EPF contribution for foreign workers by year-end 2025 will add to overall operating expenses.
In response to these challenges, Jaycorp’s core furniture segment, despite facing sluggish orders and rising costs, will prioritize cost control, market expansion, and product development to enhance profitability and growth. This strategic focus is crucial for maintaining resilience in a competitive and volatile environment.
Summary and Outlook
Jaycorp Berhad’s Q3 FY2025 report reflects a period of significant challenges, particularly evident in the decline of its core furniture and packaging segments, and losses in construction and wood processing. The overall shift from profit to loss highlights the impact of reduced demand, currency fluctuations, and rising operational costs. However, the renewable energy segment showed revenue growth, indicating potential diversification pathways. The declaration of an interim dividend also signals the company’s commitment to shareholder returns amidst a tough operating environment.
Key points from this quarter’s report include:
- Overall revenue and profit decline, driven by lower demand across several key segments, especially furniture and packaging.
- Increased operational costs due to minimum wage hike, electricity tariff increase, and new EPF contributions for foreign workers.
- Strategic focus on cost control, market expansion, and product development within the core furniture business to mitigate headwinds.
- An interim dividend declaration, reflecting continued shareholder value focus despite a challenging quarter.
While the immediate future presents clear headwinds, Jaycorp’s management is proactively addressing these challenges through strategic initiatives. Their ability to adapt to changing market dynamics and manage rising costs will be critical in navigating the path ahead.
Your Thoughts?
From a professional standpoint, it’s clear that Jaycorp is operating in a demanding economic climate, both globally and domestically. The decline in demand across several segments, coupled with the impending rise in operational costs, presents a formidable challenge. However, the management’s stated focus on cost control, market expansion, and product development in their core furniture business is a sound strategy for resilience. The continued investment in renewable energy, despite current profitability pressures, also points towards a long-term diversification effort.
What are your insights on Jaycorp’s performance this quarter? Do you believe their strategies are sufficient to counter the prevailing market headwinds and rising costs? Share your views in the comments below!
