BAuto 3Q net profit down 67%, no thanks to lower car sales and higher costs

This article first appeared in The Edge Financial Daily, on March 17, 2020.
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KUALA LUMPUR: Bermaz Auto Bhd (BAuto) saw its net profit slump 66.5% to RM27.15 million for the third quarter ended Jan 31, 2020 (3QFY20) largely due to lower profit contribution from the domestic operations and lower share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd.

BAuto also contributed the lower profit on thinner margins arising from higher costs on the new facelift of the CX-5 model compelled by the current market sentiment as well as it had incurred expense from employees’ share scheme amounting to RM800,000 in the quarter under review.

As a result, its earnings per share for 3QFY20 fell to 2.34 sen, from 6.99 sen last year, according to its filing with Bursa Malaysia.

Quarterly revenue also shrank nearly 40% to RM467.46 million versus RM778.13 million a year ago. BAuto said the lower revenue is due to lower sales volume from domestic and Philippine operations.

The group has declared a lower third interim single-tier dividend of 1.45 sen per share, payable on May 28, compared to a dividend of 4.5 sen per share last year. This brings the total dividend distribution to 7.45 sen per share for its nine-month period ended Jan 31 (9MFY20), versus 10.75 sen a year ago.

For 9MFY20, net profit contracted 52.2% to RM98.05 million from RM205.21 million, while revenue declined 25.3% to RM1.46 billion against RM1.95 million a year earlier.

On prospect, BAuto said the performance of the group for the final quarter will be challenging.

“The Malaysia automotive sector is expected to remain challenging in 2020 in view of the stiff competition among the automotive players. The global headwinds, such as the trade war between the US and China, the outbreak of the Covid-19 virus, the global recession fear and the recent political turmoil has resulted in weaker consumer sentiment particularly on purchase of big-ticket discretionary items such as motor vehicles,” the group added.

In the Philippines, BAuto said the Bermaz Auto Philippines Inc seeks to preserve its revenue and profitability through further strengthening of its brand equity in tandem with sustainable dealer support and the launch of the new and facelift models.