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Zantat Holdings Q2 2025: Navigating Headwinds While Planting Seeds for a Greener Future
Zantat Holdings Berhad has just released its financial results for the second quarter ended June 30, 2025, painting a picture of a company grappling with challenging market conditions while strategically investing in its future. The quarter saw a dip in revenue and a swing to a net loss, primarily due to softer demand in its core industrial minerals segment. However, the real story might be in the company’s bold new venture into the bioplastics market with its “Earthya™” brand, a move that could reshape its long-term trajectory.
Let’s break down the numbers and see what’s driving Zantat’s performance.
Core Data Highlights: A Tough Quarter Under the Microscope
Comparing this quarter to the same period last year, Zantat faced significant pressure on both its top and bottom lines. The overall financial performance reflects a challenging industrial climate.
Q2 2025 Financial Snapshot (vs Q2 2024)
The company experienced a downturn across key financial metrics, shifting from profit to loss.
Q2 2025
Revenue: RM 20.60 million
Pre-tax (Loss)/Profit: (RM 1.63 million)
Net (Loss)/Profit: (RM 1.46 million)
(Loss)/Earnings Per Share: (0.51 sen)
Q2 2024
Revenue: RM 22.54 million
Pre-tax (Loss)/Profit: RM 1.10 million
Net (Loss)/Profit: RM 0.65 million
(Loss)/Earnings Per Share: 0.23 sen
The 8.6% drop in revenue was primarily caused by lower sales tonnage for its main products. This slowdown had a more pronounced effect on profitability, with the company recording a net loss of RM1.46 million compared to a profit of RM0.65 million a year ago. The key reasons for this include a significant drop in gross profit margin from 38.1% to 27.1% and an unrealised loss on foreign exchange amounting to RM0.42 million.
A Deeper Dive into Revenue Streams
Zantat’s core business remains the production of calcium carbonate products. A closer look reveals where the weaknesses and strengths lie.
| Product/Segment | Q2 2025 Revenue (RM’000) | Q2 2024 Revenue (RM’000) | Change (%) |
|---|---|---|---|
| Ground Calcium Carbonate (GCC) | 15,034 | 17,666 | -14.9% |
| Calcium Carbonate (CC) Dispersion | 2,886 | 3,347 | -13.7% |
| Others (Trading & Processing) | 2,231 | 974 | +129.9% |
The production of GCC, which accounts for 73% of total revenue, saw a notable 14.9% decline. This was the main drag on the company’s performance. On a brighter note, the ‘Others’ segment, which involves trading and processing other industrial minerals, more than doubled its revenue, though it remains a smaller part of the overall business.
Financial Health Check: Cash Flow Under Scrutiny
While the company’s balance sheet remains stable with net assets per share holding steady at RM0.26, the cash flow statement reveals some pressure.
For the first six months of 2025, Zantat recorded a negative operating cash flow of RM5.8 million. This means the company used more cash in its day-to-day operations than it generated. This is a stark contrast to the same period last year when it generated a positive operating cash flow of RM7.75 million. This shift was driven by the operating loss and changes in working capital.
Risk and Prospect Analysis: Challenges and Green Shoots
Zantat’s management is transparent about the hurdles ahead. The industrial climate is cautious, with uncertainties in freight, foreign exchange, and restocking cycles affecting customer demand. The calcium carbonate market in Malaysia has seen a price correction due to oversupply and weaker demand from sectors like plastics and coatings.
However, the company is proactively addressing these challenges with a two-pronged strategy:
- Operational Discipline: In its core business, the focus is on cost optimisation and supply chain management rather than aggressive expansion. The company notes that domestic demand, particularly from the gradually recovering glove sector, has been more resilient than exports.
- Strategic Diversification: The most exciting development is the progress in the bioplastics division. The company’s proprietary compostable brand, Earthya™, is now available in retail outlets and on e-commerce platforms. While sales volumes are still small, management reports encouraging public response and growing consumer interest, partly driven by national attention on microplastic pollution. This move into sustainable materials represents a significant long-term growth opportunity.
Summary and Investment Recommendations
Zantat Holdings faced a difficult second quarter, with market headwinds impacting its core calcium carbonate business, resulting in a revenue decline and a shift to a net loss. The negative operating cash flow is a key area for investors to watch. The short-term outlook appears challenging, contingent on a recovery in industrial demand and stabilisation of foreign exchange rates.
Despite these challenges, the company’s strategic foray into the bioplastics market with its Earthya™ brand is a compelling, forward-looking initiative. This diversification aligns with global sustainability trends and could become a significant value driver in the future. The resilience of the domestic market provides a partial cushion against weaker export demand.
Disclaimer: This analysis is based on the company’s latest quarterly report and is for informational purposes only. It should not be construed as investment advice. All investors are encouraged to conduct their own research and due diligence before making any investment decisions.
Key Risks to Consider:
- Market Demand Volatility: Continued softness in global and domestic demand for industrial minerals could further impact sales and profitability.
- Foreign Exchange Fluctuations: As seen this quarter, currency movements can have a material impact on the bottom line.
- Competitive Pressure: An oversupply in the calcium carbonate market could continue to suppress prices and margins.
- Execution Risk: The success of the new Earthya™ bioplastics venture, while promising, is in its early stages and depends on successful market adoption and scaling of operations.
Final Thoughts
From my professional viewpoint, while the Q2 2025 results are concerning from a short-term profitability perspective, Zantat’s strategic pivot with the Earthya™ brand is a forward-looking move that aligns with global sustainability trends. The key for investors will be to monitor if this new venture can scale effectively to offset the cyclical nature of their core industrial business. The journey ahead may be bumpy, but the company is clearly planting seeds for a potentially greener future.
What are your thoughts on Zantat’s move into bioplastics? Do you see it as a game-changer for the company’s long-term growth? Share your views in the comments below!
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