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Auro Holdings: A Remarkable Turnaround in Q1 FY2026, But What’s Behind the Profit?
Auro Holdings Berhad has just released its first-quarter results for the financial year 2026, and the headline numbers are impressive. The company has swung from a loss to a profit, propelled by a significant surge in revenue. This report marks a pivotal moment for the group as it continues its strategic shift towards the vibrant Food & Beverage (F&B) sector.
The standout figure is the group’s return to profitability, posting a Profit Before Tax of RM0.79 million, a dramatic reversal from a loss of RM0.87 million in the same quarter last year. But is this growth sustainable? Let’s dive into the details.
A Stunning Financial Turnaround: By the Numbers
Auro Holdings’ performance in the first quarter ended 31 May 2025 shows strong year-on-year growth across key metrics. The primary driver for this was the expanding F&B business, although a significant one-off income item played a crucial role in the bottom-line profit.
Q1 FY2026 (ended 31 May 2025)
Revenue: RM 5.72 million
Profit Before Tax: RM 0.79 million
Net Profit: RM 0.79 million
Q1 FY2025 (ended 31 May 2024)
Revenue: RM 3.20 million
Loss Before Tax: (RM 0.87 million)
Net Loss: (RM 0.87 million)
The Group’s revenue soared by an impressive 79%, largely thanks to contributions from new HEYTEA outlets opened over the past year. This top-line growth is a clear indicator that the company’s venture into the F&B space is gaining traction with consumers.
However, the leap from a loss to a profit was primarily fueled by “Other Income,” which included a substantial RM2.15 million legal settlement received in the company’s favour. Without this one-off gain, the underlying operations would still be in a loss-making position. This is a critical detail for understanding the true operational health of the company.
| Metric | Q1 FY2026 (RM ‘000) | Q1 FY2025 (RM ‘000) | Change (%) |
|---|---|---|---|
| Revenue | 5,717 | 3,197 | +78.8% |
| Profit/(Loss) Before Tax | 794 | (869) | Turned to Profit |
| Net Profit/(Loss) for the period | 794 | (869) | Turned to Profit |
| Earnings Per Share (sen) | 0.12 | (0.15) | Turned to Profit |
Diving Deeper: F&B Growth vs. Timber Contraction
Auro’s transformation is a tale of two business segments moving in opposite directions.
- Food & Beverage (F&B): This segment is the new engine of growth. Revenue more than doubled to RM5.41 million from RM2.56 million last year. The company now operates nine HEYTEA outlets across strategic locations like the Klang Valley, Genting Highlands, and Penang. However, the segment is still in an investment phase, recording a loss of RM0.79 million as it spends on new store openings and marketing initiatives to build a long-term foundation.
- Moulding & Timber: In line with its strategy, the Group is downsizing its legacy timber business. Revenue from this segment fell to RM0.31 million from RM0.64 million, and it continues to be loss-making.
Navigating Challenges and Seizing Opportunities
The Board of Directors acknowledges the volatile economic conditions but remains optimistic about the Group’s prospects, particularly in the F&B sector. Management believes that Malaysia’s rising disposable income and the public’s excitement for innovative F&B brands position the HEYTEA franchise for significant growth.
The strategy is clear: drive top-line revenue through targeted marketing and expand the distribution network to achieve profitability in the near future. Concurrently, the Group will continue to control overheads in its downsizing timber business and actively seek new, viable business ventures to strengthen its overall financial performance.
As for dividends, the company has not declared any for the current quarter as it focuses on reinvesting for growth.
Summary and Outlook
Auro Holdings’ first-quarter results paint a picture of successful transformation and strategic redirection. The headline profit is a welcome sign, but it’s crucial to recognise the impact of the one-off legal settlement. The real story lies in the operational pivot to the F&B sector, which is delivering powerful revenue growth, albeit with profitability still on the horizon.
The company’s future success hinges on its ability to convert the growing popularity of its HEYTEA outlets into sustainable profits. Investors should keep a close watch on the following key points in the upcoming quarters:
- Path to F&B Profitability: Can the F&B segment transition from its investment phase to become a profitable contributor to the Group’s bottom line?
- Core Earnings Growth: Future financial reports will need to demonstrate profit growth from core operations, independent of non-recurring gains.
- Timber Segment Management: The effectiveness of downsizing the timber business to minimise its drag on overall performance remains important.
- New Business Ventures: The Group’s search for new opportunities could unlock further value but also introduces new variables to consider.
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