TSA Group Berhad Q2 2025 Report: Profits Surge Despite Revenue Headwinds, Rewards Shareholders with Dividend
TSA Group Berhad, a key player in the stainless steel and metal products industry, has just released its financial results for the second quarter ended June 30, 2025. The report paints a fascinating picture: while revenue saw a decline amid market softness, the company showcased remarkable resilience by significantly boosting its profitability. Let’s dive deep into the numbers and see what’s driving their performance.
The standout story from this quarter is a powerful 38.6% surge in Profit Before Tax (PBT), coupled with the announcement of a 1 sen interim dividend for shareholders.
A Tale of Two Trends: Revenue Dips, Profits Soar
At first glance, the top-line numbers might seem concerning. The Group’s revenue for Q2 2025 came in at RM62.1 million, a 16.9% decrease compared to the same quarter last year. The company attributes this to lower average selling prices and softer market demand, reflecting broader economic challenges.
However, the real story lies in the bottom line. Despite the revenue dip, TSA Group managed to improve its operational efficiency and margins, leading to impressive profit growth.
Q2 2025 (Current Quarter)
Revenue: RM62.1 million
Profit Before Tax (PBT): RM8.0 million
Profit After Tax (PAT): RM5.9 million
Earnings Per Share (EPS): 1.93 sen
Q2 2024 (Same Quarter Last Year)
Revenue: RM74.6 million
Profit Before Tax (PBT): RM5.8 million
Profit After Tax (PAT): RM4.2 million
Earnings Per Share (EPS): 1.36 sen
Key Financial Highlights at a Glance
| Metric | Q2 2025 (RM’000) | Q2 2024 (RM’000) | Change (%) |
|---|---|---|---|
| Revenue | 62,053 | 74,644 | -16.9% |
| Profit Before Tax (PBT) | 8,046 | 5,806 | +38.6% |
| Profit After Tax (PAT) | 5,942 | 4,215 | +41.0% |
| Earnings Per Share (sen) | 1.93 | 1.36 | +41.9% |
What Fueled the Profit Growth?
So, how did TSA Group achieve higher profits with lower sales? The report points to several key factors:
- Improved Gross Profit Margin: The company successfully enhanced its profitability on sales. A significant contributor was a reversal of provision for slow-moving inventories amounting to RM1.7 million, indicating efficient inventory management.
- Favourable Forex: A net foreign exchange gain of RM0.7 million provided a welcome boost.
- Reduced Costs: The Group benefited from lower impairment losses on financial assets (a RM1.2 million improvement) and a decrease in finance costs by RM0.3 million.
These factors combined to more than offset the impact of lower revenue, demonstrating strong cost control and operational acumen from the management team.
A Sweet Reward for Shareholders
In a clear sign of confidence and commitment to its investors, the Board has declared an interim single-tier dividend of 1 sen per ordinary share. This dividend is scheduled to be paid on September 24, 2025.
Navigating the Future: Risks and Strategic Moves
Looking ahead, TSA Group remains focused on expanding its core business of trading stainless steel and manufacturing stainless steel pipes. The construction of its new manufacturing facility in Semenyih is progressing, with earthworks currently underway. This expansion is a key part of its long-term growth strategy.
However, the company acknowledges the challenges ahead. The stainless steel industry is closely tied to the health of the manufacturing and construction sectors, which are influenced by global economic conditions. This makes the business susceptible to fluctuations in demand and commodity pricing.
In a strategic move to diversify and build new revenue streams, the Group has entered the quarry business. Through its subsidiary TSA Quarry Sdn. Bhd., it has been appointed as the joint operator and sole distributor for a granite quarry in Perak. This venture represents an exciting new chapter for the company and could provide a buffer against the cyclical nature of the metals industry.
Summary and Investment Recommendations
TSA Group’s Q2 2025 performance is a testament to its operational resilience. While facing market headwinds that impacted revenue, the company’s ability to significantly grow its profits through improved margins and cost control is highly commendable. The dividend declaration further underscores a healthy financial position and a shareholder-friendly approach. The strategic diversification into the quarry business is a proactive step to mitigate risks and unlock new growth potential. As with any investment, it is important for investors to conduct their own due diligence. This article does not constitute any buy or sell recommendation.
Key risks to monitor include:
- Dependence on the cyclical manufacturing and construction industries.
- Vulnerability to global economic shifts that affect commodity prices and demand.
- Execution risks associated with the new quarry venture and the Semenyih plant expansion.
Final Thoughts
From a professional standpoint, TSA Group’s ability to navigate a challenging market while improving profitability is a strong indicator of a well-managed company. The strategic diversification into quarrying is a logical step to build long-term resilience. The key will be to watch how they execute on their expansion plans and integrate this new business segment.
What are your thoughts on TSA Group’s performance and its diversification into the quarry business? Do you think this is a smart move for long-term growth?
Share your views in the comments section below!
