Greetings, fellow investors! Today, we’re unboxing the latest financial report from JAYCORP BERHAD, a diversified Malaysian conglomerate, for its third financial quarter ended 30 April 2025. This report offers a candid look at the company’s journey through a challenging economic landscape. While the overall picture shows a dip into a loss before tax for the quarter, it’s crucial to understand the underlying dynamics of each segment and the strategic moves JAYCORP is making. On a positive note, the Board has declared an interim dividend, signaling a continued commitment to shareholder returns.

Core Data Highlights: A Mixed Bag

JAYCORP’s Q3 FY2025 results reflect the current market complexities. The Group reported a revenue of RM36.8 million, a notable decrease from RM48.6 million in the same period last year. More significantly, the company 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. Let’s break down the key figures:

Segmental Deep Dive: Where the Changes Occurred

Understanding JAYCORP’s diverse business units helps paint a clearer picture of the challenges and resilience within the Group:

Furniture Segment

The furniture segment remains the cornerstone of JAYCORP’s revenue. However, it experienced a significant downturn in Q3 FY2025, with revenue dropping by 23.94% to RM22.4 million from RM29.4 million in Q3 FY2024. Profit before tax plummeted by 82.91% to RM0.7 million from RM4.3 million. This decline was primarily attributed to decreased demand from both export markets and local customers, compounded by the strengthening of the Malaysian Ringgit (MYR) against the United States Dollar (USD).

Packaging Segment

This segment saw its revenue decrease by 24.57% to RM7.9 million (Q3 FY2024: RM10.4 million), and profit before tax by 73.32% to RM0.2 million (Q3 FY2024: RM0.8 million). The lower performance was a direct result of reduced demand from both internal and external customers.

Wood Processing Segment

The wood processing segment’s revenue fell by 17.08% to RM4.6 million (Q3 FY2024: RM5.6 million). More concerning, it swung to a loss before tax of RM0.9 million from a profit of RM0.3 million in Q3 FY2024, a staggering 407.79% decline. This was due to lower inter-company and external sales, higher write-down of inventories, and the initial startup costs of the newly incorporated subsidiary, Jaycorp LVL Sdn Bhd (JLVL), which is still in its nascent stages.

Renewable Energy Segment

A brighter spot in terms of revenue, this segment saw a 10.84% increase to RM3.7 million (Q3 FY2024: RM3.3 million) driven by higher offtake from customers. However, profit before tax decreased by 38.15% to RM0.3 million (Q3 FY2024: RM0.4 million) due to higher raw material costs and expenses related to its expansion project.

Construction Segment

Revenue in the construction segment dropped by 36.97% to RM2.6 million (Q3 FY2024: RM4.1 million), and it posted a loss before tax of RM0.8 million, a significant decline from a slight profit of RM0.03 million in Q3 FY2024. This was largely due to lower percentage completion on existing and new projects, coupled with narrower construction margins.

Investment Holding and Joint Venture

The investment holding segment recorded a loss before tax of RM0.9 million (Q3 FY2024: RM4.3 million profit), primarily due to the absence of dividend declarations from subsidiaries in this quarter and higher impairment loss on receivables. The share of loss from joint ventures also increased by 56.53% to RM0.7 million (Q3 FY2024: RM0.5 million loss), mainly from the Malaysian joint venture company facing lower export sales, higher raw material consumption, and inventory write-downs.

For the cumulative nine months (Year To-date) ended 30 April 2025, the Group’s revenue was RM131.5 million, a 13.29% decrease from RM151.6 million in the previous corresponding period. Profit before tax for the nine months stood at RM6.4 million, a 65.79% decline from RM18.7 million.

Financial Health Snapshot

As of 30 April 2025, JAYCORP’s total borrowings stood at RM11.914 million, with current borrowings at RM6.942 million and non-current at RM4.972 million. The Group also has capital commitments of RM3.570 million for property, plant, and equipment, indicating ongoing investments. Contingent liabilities, primarily corporate guarantees for banking facilities to subsidiaries and joint ventures, amounted to RM101.989 million.

Navigating Risks and Forging Prospects

JAYCORP acknowledges the challenging global and domestic economic landscape. The report highlights several key factors that could impact its performance:

• Global Uncertainty: Ongoing trade negotiations, geopolitical tensions, and volatility in global financial markets, exacerbated by recent US tariff measures, create a cloudy outlook for export-oriented businesses.
• Domestic Headwinds: While Malaysian domestic demand remains sustained, the growth outlook is overshadowed by potential slowdowns in major trading partners and uncertainties affecting business and consumer spending.
• Rising Operating Costs: Local businesses, including JAYCORP, are facing increasing cost pressures. The minimum wage hike to RM1,700 (effective Feb 2025), the electricity tariff hike (effective July 2025), and the mandatory 2% EPF contribution for foreign workers (by end 2025) will all contribute to elevated labour, raw material, and operational expenses.

Despite these challenges, JAYCORP is not standing still. The Group’s core furniture business is prioritizing strategic initiatives to enhance profitability and growth. This includes a strong focus on cost control, market expansion, and product development. These strategies are vital for mitigating the impact of sluggish orders and rising costs, ensuring the Group remains competitive and adaptable.

Shareholder Returns: A Dividend Declaration

Amidst the challenging quarter, JAYCORP has demonstrated its commitment to shareholders. The directors have declared a first single tier interim dividend of 1.5 sen per ordinary share for the financial year ending 31 July 2025. This dividend is payable on 30 July 2025, with an entitlement date of 16 July 2025.