Pecca Group Rides Through Market Headwinds: A Deep Dive into Their Latest Quarterly Performance

Hello fellow Malaysian investors and market watchers! Today, we’re taking a closer look at Pecca Group Berhad, a prominent name in the automotive and aviation upholstery industry, as they unveil their unaudited condensed consolidated financial results for the fourth quarter and full financial year ended 30 June 2025 (FY2025).

In a period marked by shifting market dynamics and economic challenges, Pecca Group has demonstrated resilience, navigating a slight revenue decline while remarkably achieving full-year profit growth. This report provides a fascinating glimpse into how they’re adapting and strategizing for future expansion, all while announcing a dividend for their shareholders.

Core Financial Highlights: Navigating the Market Landscape

Pecca Group’s latest report presents a mixed bag, with the individual quarter showing a slight contraction, while the full-year performance highlights underlying operational strengths.

Fourth Quarter 2025 vs. Fourth Quarter 2024: A Snapshot

For the fourth quarter ended 30 June 2025 (4Q 2025), Pecca Group experienced a dip in performance compared to the same period last year (4Q 2024). This was primarily due to lower sales volume in the Automotive segment, influenced by customer factory closures for maintenance and a normalization of demand.

Looking at the numbers, revenue for 4Q 2025 decreased by 3.9%, leading to a 7.2% decline in Profit for the Period. However, the report noted that improved production cost efficiency in the Automotive segment and effective cost control helped to mitigate the impact of this decline.

Full Financial Year 2025 vs. Full Financial Year 2024: Resilience in Action

Despite the quarterly challenges, Pecca Group delivered a stronger performance for the entire financial year ended 30 June 2025 (FY2025) compared to FY2024. While overall revenue saw an 7.4% decline, reflecting a moderation in Malaysia’s total industry volume (TIV) for vehicles, profit metrics showed a positive trend.

The Group’s Profit for the Period increased by a solid 4.7% for FY2025, with basic earnings per share rising by 8%. This growth, despite lower revenue, was primarily attributed to enhanced production cost efficiency within the Automotive segment and diligent cost control in selling, distribution, and administrative expenses.

Current Quarter (4Q 2025) vs. Immediate Preceding Quarter (3Q 2025)

Comparing 4Q 2025 with the immediate preceding quarter (3Q 2025), the Group’s performance remained relatively stable. Revenue saw a slight decline from RM53.10 million in 3Q 2025 to RM52.84 million in 4Q 2025, largely due to demand normalization and temporary customer factory closures. Consequently, Profit After Tax for 4Q 2025 was RM13.51 million, a 5% decrease from RM14.23 million in 3Q 2025, though cost efficiency initiatives helped mitigate this impact.

Business Segment Performance: Automotive Dominance

Pecca Group’s revenue continues to be heavily driven by its Automotive segment, contributing approximately 98% of the total revenue for FY2025. Within this, Original Equipment Manufacturer (OEM) accounted for about 92% of leather car seat cover revenue, with Replacement Equipment Manufacturer (REM) and Pre-Delivery Inspection (PDI) making up the remaining 8%.

For FY2025, the automotive segment’s OEM revenue decreased to RM185,067k from RM195,375k in FY2024, and PDI revenue also saw a notable drop to RM9,403k from RM16,637k. The ‘Others’ segment, which includes aviation services, showed a significant increase in revenue to RM2,591k for FY2025 from RM1,899k in FY2024, indicating diversification efforts are starting to bear fruit.

Financial Position: Managing Cash and Capital

The Group’s cash and cash equivalents stood at RM104,910k as at 30 June 2025, down from RM153,682k a year ago. This reduction is primarily attributable to significant cash outflows for dividend payouts (RM62,545k in FY2025, up from RM27,666k in FY2024) and the repurchase of treasury shares (RM30,926k in FY2025). Net assets per share slightly decreased to 28.74 sen from 31.11 sen.

Risk and Prospect Analysis: Charting a Course for Growth

Pecca Group acknowledges the prevailing market challenges but remains committed to its long-term growth strategies across its key segments.

Automotive Segment: Strategic Expansion Amidst Normalization

The Malaysian Automotive Association (MAA) forecasts a Total Industry Volume (TIV) of 780,000 units for 2025, reflecting a normalization of demand after a period of high backlogs. The first half of 2025 already saw a 4.6% decline in TIV. Despite these headwinds, exacerbated by economic challenges and global policies, Pecca Group is proactively expanding its capabilities.

• Capacity Expansion: The Group is progressing with its second manufacturing facility in Serendah, Selangor, designed to support rising demand for both automotive and aviation components.
• OEM Diversification: Beyond traditional leather seat covers, Pecca is expanding into broader interior upholstery, aiming to offer more integrated solutions across the automotive value chain.
• REM Market Reach: Pecca is strengthening its presence in key international Replacement Equipment Manufacturer (REM) markets, including the UK, Saudi Arabia, the Netherlands, the US, Singapore, Australia, New Zealand, the broader Middle East, and Europe, where demand for customized, high-quality REM parts remains consistent.
• Indonesia Footprint: Through its subsidiary PT Pecca Gemilang Indonesia, the Group is actively pursuing OEM contracts and securing projects for automotive accessory covers, expanding its Southeast Asian market share.

Aviation Segment: Soaring Towards Regional Leadership

Malaysia’s aviation sector is on an upward trajectory, with aerospace industry revenue projected to grow by 20-25% in 2025. This positive outlook positions Malaysia as a crucial Maintenance, Repair, and Overhaul (MRO) hub, creating significant demand for Pecca’s services.

• Project Successes: Following a successful business class seat cover replacement program for an Airbus A320, Pecca has undertaken multiple seat cover replacement programs for helicopters and various domestic and international airlines. They have also secured a long-term project and completed several MRO assignments for a domestic airline.
• Certification Drive: Building on existing certifications from the Civil Aviation Authority of Malaysia and the European Union Aviation Safety Agency, Pecca is actively pursuing additional certifications from regulators in Thailand, Singapore, Indonesia, and Malaysia (Directorate General Technical Airworthiness) to bolster its regional expansion.
• New Contract Pursuit: The Group is actively seeking new contracts for commercial and general aviation aircraft, aiming to broaden its service portfolio.

Overall Business Outlook

Pecca Group maintains a cautiously positive long-term outlook. Their growth strategy is anchored on geographic expansion and diversification across four key pillars: OEM, REM, Aviation, and Emerging Ventures. Operationally, the focus remains on enhancing organizational and manufacturing excellence, optimizing production efficiency, and maintaining cost competitiveness to meet the demand for high-quality products.

Final Thoughts and Your Perspectives

Pecca Group’s latest report paints a picture of a company actively adapting to a dynamic market. Their ability to grow full-year profits amidst revenue deceleration speaks volumes about their operational efficiency and strategic agility. The focus on diversification and expansion, particularly in the promising aviation sector and international REM markets, suggests a proactive approach to long-term sustainability.

What do you think of Pecca Group’s performance and future strategies? Do you believe their capacity expansion and diversification efforts will be sufficient to overcome potential market headwinds in the coming years? Share your insights and perspectives in the comments section below! Let’s discuss how this Malaysian powerhouse might continue to evolve.