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Eonmetall Q2 2025: Revenue Climbs, But Profits Face a Squeeze
Eonmetall Group Berhad has just released its financial results for the second quarter ended June 30, 2025. The report paints a mixed picture: while the company successfully grew its revenue, profitability took a significant hit amidst a challenging market. For investors tracking this steel and machinery player, this quarter reveals crucial trends about its operational resilience and the headwinds it faces. Let’s dive into the numbers to understand what’s driving this performance.
The standout figure this quarter is the impressive 16% year-on-year revenue growth, a positive sign of market demand for its products.
Core Financials: A Tale of Two Stories
While top-line revenue grew, the bottom line tells a different story. The Group swung from a profit before tax in the same quarter last year to a loss, primarily due to rising costs and specific one-off expenses. This divergence between revenue and profit is the central theme of this quarter’s results.
Q2 2025 (Current Quarter)
- Revenue: RM 41.2 million
- Loss Before Tax (LBT): RM 3.6 million
- Net Loss After Tax: RM 4.1 million
- Basic Loss Per Share: -1.35 sen
Q2 2024 (Comparative Quarter)
- Revenue: RM 35.7 million
- Profit Before Tax (PBT): RM 1.1 million
- Net Profit After Tax: RM 0.7 million
- Basic Earnings Per Share: 0.25 sen
The shift from profit to loss was driven by several factors mentioned in the report, including higher manufacturing costs, increased factory overheads, and a one-off impairment loss on receivables amounting to RM1.59 million.
Segment Performance Breakdown
A closer look at the individual business segments reveals where the pressures and opportunities lie. Both core segments saw revenue growth but struggled with profitability.
| Business Segment | Revenue (Q2 2025 vs Q2 2024) | PBT/LBT (Q2 2025 vs Q2 2024) | Key Drivers |
|---|---|---|---|
| Machinery & Equipment | ▲ RM6.9M vs RM3.4M | ▼ LBT of RM0.2M vs PBT of RM1.2M | Loss driven by lower margin product mix and higher factory overheads (electricity, rent). |
| Steel Product & Trading | ▲ RM34.4M vs RM32.3M | ▼ LBT of RM1.9M vs PBT of RM0.8M | Loss attributed to higher manufacturing costs and a one-off impairment expense. |
| Property & Others | – | ▼ LBT of RM1.5M vs LBT of RM0.9M | Increased loss due to higher unrealized foreign exchange losses. |
On a cumulative six-month basis, the Group reported a Loss Before Tax of RM7.9 million, a stark contrast to the Profit Before Tax of RM22.3 million in the first half of 2024. However, it’s crucial to note that the 2024 figure was significantly boosted by a one-off gain of RM22.6 million from a compulsory land acquisition, making a direct comparison misleading.
Financial Health Check: A Look at the Balance Sheet and Cash Flow
Despite the reported loss, Eonmetall’s cash flow from operating activities was positive, standing at RM6.3 million for the first six months of 2025. This is a significant improvement from the RM7.9 million cash used in operations during the same period last year, indicating better working capital management. The company’s cash and cash equivalents also saw a healthy increase to RM18.6 million. However, net assets per share dipped from RM1.92 to RM1.71, reflecting the impact of the recent losses on its equity base.
Navigating Choppy Waters: Risks and Future Outlook
The Board of Directors has acknowledged that the business environment for 2025 will be challenging. The global steel industry is grappling with over-capacity and weakening demand, a situation exacerbated by trade tariff uncertainties initiated by the USA, which impacts the Group’s efforts to re-enter that market.
However, there’s a silver lining. The Group remains optimistic about its Machinery and Equipment segment. High Crude Palm Oil (CPO) prices are expected to drive higher demand for its palm oil-related machinery, offering a potential growth avenue to offset the challenges in the steel sector.
To navigate these challenges, the Group is exercising caution and managing its resources prudently. It has also undertaken a private placement exercise to raise capital, with proceeds earmarked for repaying bank borrowings, purchasing raw materials, and funding operating expenses, thereby strengthening its financial footing.
Summary and Investment Recommendations
Eonmetall’s Q2 2025 results present a classic case of a company navigating a tough external environment. The revenue growth is a testament to its market presence, but profitability is clearly under pressure from rising costs and industry-wide headwinds. The positive operating cash flow is a sign of operational discipline. The company’s future performance will likely depend on its ability to manage costs effectively and capitalize on the opportunities in its machinery segment, which serves as a potential buffer against the volatility in the steel market. Investors should note that the board has not recommended any dividend for the current financial period.
Key Risks to Monitor:
- Steel Industry Downturn: The ongoing over-capacity and weak demand in the global and Malaysian steel markets remain the primary challenge.
- Trade & Tariff Uncertainty: The impact of international trade policies, particularly from the USA, could continue to affect profitability and market access.
- Cost Pressures: Rising costs for raw materials, manufacturing, and overheads could continue to squeeze profit margins if not managed carefully.
Final Thoughts
While the headline loss is a point of concern, the underlying details provide a more nuanced view. The company’s ability to grow revenue and generate positive operating cash in a difficult quarter should not be overlooked. The key question for the future is whether the bright spot in the machinery segment can shine brightly enough to counter the gloom in the steel sector.
Do you think Eonmetall can successfully leverage the high CPO price environment to boost its machinery segment’s profitability in the coming year?
Share your thoughts and analysis in the comments section below!
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