This article first appeared in The Edge Financial Daily on December 13, 2018

KUALA LUMPUR: Bermaz Auto Bhd (BAuto) recorded an over  three-fold jump in net profit to RM73.92 million, or 6.36 sen per share, in the second quarter ended Oct 31, 2018 (2QFY19) on better sales during the three-month tax holiday, improved vehicle sales mix and profit margins.

In a filing with Bursa Malaysia yesterday, BAuto said other factors were stronger ringgit against the yen and significantly higher share of profit contribution from associate company Mazda Malaysia Sdn Bhd on higher production volume of the new CX-5 model.

BAuto said although it anticipates a slowdown in the months ahead because of the front loading of consumer purchases, it believes the huge back orders collected during the goods and services (GST) holiday as a result of the group’s absorption of the sales and services tax (SST) will give it a competitive advantage.

Revenue spiked 46.34% to RM690.32 million on higher sales volume from its domestic operations as a result of the reduction in the 6% GST to 0% for June to August this year, and the boost in consumer demand, especially for the new CX-5 model following the group’s announcement it would absorb the sales tax for bookings received before Sept 1, 2018.

BAuto has declared a second interim single-tier dividend of 3.75 sen per share for the financial year ending April 30, 2019 (FY19), payable on Jan 25, 2019.

For the cumulative six months, net profit jumped nearly three-fold to RM124.2 million or 10.74 sen a share, against RM42.41 million or 3.68 sen a share in the same period last year, while revenue increased 36.25% to RM1.18 billion.

It said trading conditions ahead are expected to remain challenging following the end of the tax holiday period, competitive trading environment, weak ringgit and cautious consumer sentiment as a result of uncertainties in the local and global economies.

“The sales volume reflected a dip after the implementation of the SST on Sept 1, 2018, which is in line with our expectations, as the surge in the demand from June to August 2018 has been neutralised with most customers having already forward purchased their vehicles during the tax holiday period,” said BAuto.

BAuto said despite the challenging market trading conditions, the bookings collected since the implementation of the SST were encouraging due to the coming festive seasons.