KUALA LUMPUR (Aug 16): Warisan TC Holdings Bhd saw its net profit for the second quarter ended June 30, 2018 (2QFY18) more than double to RM1.77 million or 2.72 sen per share from RM839,000 or 1.29 sen per share a year ago, primarily due to higher revenue from its machinery division and improvement in the automotive business's overall gross profit margin.

This was despite its revenue declining by 16.5% to RM112.1 million from RM134.3 million in 2QFY17.

In a separate filing with Bursa Malaysia, Warisan TC's board of directors declared an interim single tier dividend of 1 sen per share for the financial year ending Dec 31, 2018 (FY18), payable on Sept 28.

For the first half of financial year 2018 (1HFY18), the group's net profit more than doubled to RM3.81 million or 5.85 sen per share from RM1.17 million or 1.8 sen per share a year ago.

This was despite 1HFY18 revenue falling by 5.5% year-on-year (y-o-y) to RM233.2 million from RM246.8 million.

The note filed with Bursa said the decline in revenue was primarily due to lower contribution from the travel and car rental division and its used vehicle trading business.

In the machinery division, revenue grew by 14.8% y-o-y to RM125.7 million from RM109.5 million while profit for the segment increased by 20% to RM13.8 million in 1HFY18 from RM11.5 million in 1HFY17, amid higher revenue registered and lower operating expenses as a result of strict cost management initiatives.

The travel and car rental division saw a 25.2% decline in revenue to RM75.8 million in 1HFY18 from RM101.4 million a year ago, on lower contribution from the travel subdivision, specifically a slowdown in the incentive tour market and inbound segment due to rescheduling of traveling plans as a result of the anxiety caused by the impending general election to overseas travellers.

Similar to the decline in revenue, the segment's profit also fell by 12.5% y-o-y to RM26.7 million in 1HFY18 from RM30.5 million.

The automotive division also saw a 19.9% decline in 1HFY18 revenue to RM22.1 million from RM27.6 million in 1HFY17 due to a reduction in revenue generated from the trading of used vehicles. Nonetheless, the segment saw a lower loss at RM1.1 million compared to a loss of RM1.7 million in 1HFY17 due to higher gross profit margins achieved by the division.

The share of profit from the group's joint venture (JV) partners in Shiseido Malaysia Sdn Bhd and Wacoal Malaysia Sdn Bhd increased by 87% y-o-y in 1HFY18, due to higher revenue as a result of aggressive product promotion conducted by the JV partners.

Moving forward, Warisan TC expects the ongoing infrastructure-related projects in the country to provide traction to the machinery division. However, it said customers' cautious spending habits due to the uncertainty in the economic outlook will have an adverse impact on the travel and car rental division.

The group, however, noted that its overseas business ventures in Cambodia, Thailand and Myanmar are expected to generate additional revenues in the future.

As for the automotive division, it will continue to be impacted by the softened domestic demand for motor vehicles, stringent loan approvals and increase in interest rates.

"Identifying new products and new markets will be the key imperative for the future prospects of this division," it said.

At closing, Warisan TC's share price closed down by 8.7% or 20 sen to RM2.10 with only about 200 shares traded, giving it a market capitalisation of RM136.7 million.