Hello fellow investors and market watchers!
Today, we’re diving into the latest financial pulse of
, as they’ve just released their unaudited condensed consolidated interim financial statements for the second quarter ended 30 June 2025. This report offers a crucial look at their performance amidst an evolving economic landscape, revealing both areas of resilience and significant challenges. While revenue saw a slight dip compared to the same period last year, the company experienced a sequential improvement from the previous quarter, a noteworthy point. However, the profitability was significantly impacted by the performance of its associate and joint ventures.
Let’s break down the key figures and insights from this quarter.
Core Data Highlights: Navigating a Challenging Quarter
Overall Financial Performance: A Mixed Bag
Turbo-Mech Berhad’s revenue for the second quarter of 2025 stood at RM9.55 million, a marginal decrease of 0.4% from RM9.59 million in the corresponding quarter of the preceding year. This slight dip was attributed to a general decrease in sales activities in the Singapore region, though partially offset by increased sales in Thailand. On a positive note, the current quarter saw an 18.4% increase in revenue compared to the immediate preceding quarter (Q1 2025), indicating a sequential recovery.
Gross profit remained consistent at RM3.45 million for the quarter, maintaining a healthy gross profit margin of 36.1% (compared to 35.9% in Q2 2024). This consistency was mainly due to the company’s ability to maintain the selling prices of its products in the Singapore division. However, for the cumulative six months (Year-To-Date), the gross profit was lower at RM5.88 million, with the margin declining to 33.4% from 38.4% last year, a result of shifts in product assortment and generally lower selling prices in Singapore for the longer period.
Q2 2025 Performance
Revenue: RM9.55 million
Gross Profit: RM3.45 million
(Loss) Before Tax: RM(0.04) million
Net (Loss) Attributable to Owners: RM(0.153) million
Basic (Loss) Per Share: (0.14) sen
Q2 2024 Performance
Revenue: RM9.59 million
Gross Profit: RM3.45 million
Profit Before Tax: RM1.23 million
Net Profit Attributable to Owners: RM1.125 million
Basic Earnings Per Share: 1.04 sen
YTD Q2 2025 Performance
Revenue: RM17.62 million
Gross Profit: RM5.88 million
(Loss) Before Tax: RM(0.42) million
Net (Loss) Attributable to Owners: RM(0.566) million
Basic (Loss) Per Share: (0.52) sen
YTD Q2 2024 Performance
Revenue: RM17.86 million
Gross Profit: RM6.87 million
Profit Before Tax: RM2.08 million
Net Profit Attributable to Owners: RM1.837 million
Basic Earnings Per Share: 1.70 sen
Drilling Down: Profitability Takes a Hit
The most significant shift this quarter was in profitability. The Group reported a loss before tax of RM0.04 million for the current quarter, a stark contrast to the profit before tax of RM1.23 million in the same quarter last year. This represents a substantial decrease of 103.4%. For the cumulative period, the loss before tax was RM0.42 million, compared to a profit of RM2.08 million last year, a 120% decrease.
The primary reasons for this decline were the share of loss from an associate and joint ventures. The associate experienced weaker performance due to the prevailing challenging business environment, while the joint venture’s losses stemmed mainly from the workshop facility not yet being completed. This highlights the impact of external factors and new project timelines on the Group’s bottom line.
Balance Sheet & Cash Flow: Stability Amidst Challenges
Despite the dip in profitability, Turbo-Mech’s financial position remains relatively stable. As of 30 June 2025, cash and cash equivalents stood at RM60.11 million, an increase from RM57.10 million at the end of 2024. This healthy cash position provides a buffer in uncertain times.
Net assets per share attributable to ordinary owners of the parent were RM1.12, a slight decrease from RM1.13 as at 31 December 2024. Crucially, the Group’s net cash generated from operating activities for the cumulative period improved significantly, reaching RM3.86 million compared to RM2.63 million in the same period last year, indicating stronger operational cash generation.
Segmental Insights: Regional Dynamics
The geographical segment analysis sheds light on the varying performance across regions:
| Segment | External Sales (RM’000) | Profit/(Loss) from Operation (RM’000) |
|---|---|---|
| Malaysia | – | (431) |
| Singapore | 13,156 | 64 |
| Others (e.g., Thailand) | 4,466 | 696 |
| Group Total | 17,622 | 536 |
As observed, Singapore remains the largest contributor to external sales but recorded a modest profit from operations. The “Others” segment, which includes regions like Thailand (as mentioned in the report’s explanation for increased sales activities), showed a robust profit from operations. Malaysia, however, reported a loss from operations for the quarter. This geographical breakdown reinforces the impact of regional market conditions on the Group’s overall performance.
Risk and Prospect Analysis: Navigating Global Headwinds
Market Headwinds & Industry Outlook
Turbo-Mech acknowledges that market sentiments continue to be challenging, primarily due to global economic and political uncertainties. As a supplier of equipment and instruments to the petrochemical industries, the demand for their products and services is directly influenced by the broader market and economic conditions impacting this sector. The company does not foresee any significant changes in its clients’ business plans in the short and medium terms, which means
Company’s Strategic Response
In response to these persistent challenges, Turbo-Mech’s strategy is clear:
This approach aims to ensure the Group remains relevant and essential within the industry, providing a steady revenue stream even when new capital projects might be subdued. This focus on recurring service revenue could be a key to stability in an uncertain environment.
Summary and Investment Recommendations
Turbo-Mech Berhad’s second-quarter results for 2025 present a mixed picture. While the company demonstrated resilience with sequential revenue growth and maintained gross profit margins in the quarter compared to last year, the overall profitability was significantly affected by the underperformance of its associate and joint ventures. The increase in operating cash flow is a positive sign of underlying business health.
It is important to note that this analysis is for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any securities. Investors should conduct their own due diligence and consult with a qualified financial advisor before making any investment decisions.
Key considerations from this report include:
- The persistent challenging market sentiments driven by global economic and political headwinds.
- The company’s susceptibility to the cycles of the oil, gas, and petrochemical sector.
- The expectation of continued margin pressure from clients in the short to medium term.
- The material negative impact from the share of losses in its associate and joint ventures.
- The strategy to focus on maintenance and services to navigate these challenges and ensure relevance in the industry.
The Group’s healthy cash position and improved operating cash flow provide a foundation, but the performance of its investments in associates and JVs, along with broader market conditions, will be crucial factors to watch.
Wrapping Up
Turbo-Mech Berhad is clearly navigating through a period of external challenges, with global economic uncertainties directly impacting its core petrochemical sector. While the slight revenue decrease and significant drop in profitability due to associate and JV losses are areas of concern, the sequential revenue improvement and the strategic focus on resilient maintenance and services segments show the company’s efforts to adapt.
What are your thoughts on Turbo-Mech’s strategy to navigate these challenging times, especially their reliance on maintenance and services? Do you believe this focus will be enough to offset the broader market headwinds and the performance of their associates and joint ventures in the coming quarters? Share your insights in the comments below!
