Core Data Highlights: A Tale of Growth

UMB’s financial performance for the fourth quarter and the full financial year 2025 paints a picture of substantial growth, particularly in its bottom line. Here’s a snapshot:

Quarterly Performance (Q4 FY2025 vs. Q4 FY2024)

For the fourth quarter, UMB’s revenue saw a healthy 6% increase, climbing to RM182.5 million from RM171.5 million in the same period last year. More impressively, Profit Before Tax (PBT) surged by 22% to RM29.3 million, while Profit Attributable to Owners soared by a remarkable 57% to RM23.7 million. This significant jump in profitability was largely driven by higher crude palm oil (CPO) and palm kernel (PK) prices, coupled with increased fresh fruit bunch (FFB) production, especially from Indonesian operations.

Full-Year Performance (FY2025 vs. FY2024)

The full-year results are even more compelling. Revenue for FY2025 increased by 19% to RM711.2 million. PBT saw a massive 76% increase to RM131.5 million, and Profit Attributable to Owners almost doubled, jumping by 92% to RM97.0 million. This stellar performance was primarily due to higher average CPO and PK prices across both Malaysian and Indonesian operations, alongside an overall increase in FFB production.

Segmental Performance: The Drivers of Growth

UMB’s operations are primarily divided into Malaysian and Indonesian plantations, with an Investment Holding segment. Each played a distinct role in the overall results:

Malaysian Operations

For the full year, Malaysian operations recorded a plantation profit of RM124.5 million, a significant 58% increase from the previous year. This was largely propelled by higher average CPO prices (RM4,366/tonne in FY2025 vs. RM3,830/tonne in FY2024) and PK prices (RM3,050/tonne vs. RM2,076/tonne). Despite a slight 1% dip in FFB production for the year, the improved commodity prices and lower unit cost of production more than compensated, showcasing strong cost management.

Indonesian Operations

The Indonesian segment was a standout performer, with plantation profit soaring by 165% to RM28.2 million for the full year. This remarkable growth was fueled by a 16% increase in FFB production, coupled with higher average CPO prices (RM3,843/tonne vs. RM3,398/tonne) and PK prices (RM2,780/tonne vs. RM1,615/tonne). The increase in FFB production was a direct result of an expanding mature area and improved yields from prime-age palms.

Investment Holding

The Investment Holding segment recorded a loss of RM21.2 million for the full year, a 43% increase in loss compared to the previous year. This was predominantly due to net foreign exchange losses, mainly arising from the weakening of the Indonesian Rupiah against the Ringgit Malaysia. This highlights the currency risk inherent in holding foreign assets.

Financial Health and Cash Flow

UMB’s financial position remains robust. As at 30 April 2025:

The balance sheet shows a healthy increase in total equity and net assets per share, reflecting the company’s profitability. Cash and bank balances also saw a significant boost, rising to RM99.7 million from RM73.1 million. This is further supported by strong operating cash flows. Net cash generated from operating activities surged by an impressive 116% to RM191.6 million for the full year, demonstrating the company’s ability to convert profits into cash.

Risks and Prospects: Navigating the Future

While the past year has been strong, UMB remains realistic about the road ahead. Here’s what the company is focusing on:

• FFB Production Growth: The Group anticipates an increase in FFB production for the financial year ending 30 April 2026 (FY2026). This positive outlook is attributed to a better age profile of its palms and continuous improvements in operational efficiency. For instance, Indonesian operations saw a 16% increase in FFB production this year, which is expected to continue.
• Operational Focus: Management’s core priorities are set on enhancing labour productivity, accelerating mechanization initiatives, and driving cost efficiency across all operations. These efforts are crucial for sustaining competitive advantage and improving oil yield.
• Market Outlook: The company expects satisfactory results for FY2026, provided that CPO prices remain at their current levels. This highlights the inherent dependency on commodity price stability, a factor that can be volatile.
• Foreign Exchange Risk: The significant net foreign exchange losses, particularly from the weakening Indonesian Rupiah against the Ringgit Malaysia, remain a notable risk for the Investment Holding segment. This is a recurring factor that investors should monitor.
• Strategic Investments: UMB continues to invest in its future. The company has approved capital commitments totaling RM102.4 million, including additions of bearer plants and the construction of a new palm oil mill in Malaysia. These investments are vital for long-term growth and operational resilience. The investment in PARAS Sdn Bhd for agricultural consultancy also signifies a strategic move to enhance expertise and efficiency.

Shareholder Returns: A Rewarding Year

In a clear sign of its commitment to shareholders, UMB has declared a second interim single-tier dividend of 7 sen and a special single-tier dividend of 6 sen for the financial year ended 30 April 2025. These dividends will be paid on 7 August 2025.

Including the first interim dividend of 5 sen paid earlier, the total single-tier dividend for FY2025 amounts to an impressive 18 sen per share. This is a significant increase compared to the total single-tier dividend of 12 sen paid in the previous financial year (FY2024), reflecting the strong financial performance and improved profitability.