This article first appeared in The Edge Financial Daily on December 11, 2019

KUALA LUMPUR: Bermaz Auto Bhd’s (BAuto) net profit fell 72% for the second quarter ended Oct 31, 2019 (2QFY20) to RM20.39 million from RM73.92 million, largely due to lower contributions from domestic operations as well as from its associate company Mazda Malaysia Sdn Bhd.

Quarterly revenue fell 34% to RM457.17 million, from RM690.32 million.

Notwithstanding the weaker quarter, the group recommended a second interim dividend of 2.75 sen per share, payable on Feb 17, 2020, bringing the total dividend for the first half of FY20 to six sen, versus the 6.25 sen recorded for the same period last year.

During the quarter under review, BAuto said it suffered from lower local sales volume, lower margins from absorbing higher costs of the facelift Mazda CX-5 model on subdued market sentiment, and a stronger yen — though these were partly offset by higher revenue from the Philippines.

“The lower sales volume in the period was mainly attributed to an expected reduction in demand for the phased-out CX-5 model in favour of the new facelift CX-5 model that was launched on 30 September 2019.

“Although the new facelift CX-5 and the all-new CX-8 models were launched at the end of September 2019 and at the beginning of October 2019 respectively, delivery of some of the vehicles was delayed by the resolution of certain pricing issues.

“As such, there was no sale of CX-8 vehicles during the quarter. This affected the anticipated recovery from the lower unit sales recorded in August and September 2019,” it said.

As for the six-month period ended Oct 31, BAuto’s net profit fell 42% to RM70.9 million from RM123.2 million a year ago, while revenue fell 16% to RM992.21 million from RM1.18 billion.

“The corresponding period of the previous financial year recorded substantially higher unit sales as it benefitted from the three-month ‘tax holiday’ period and the group’s promotional campaign to absorb the sales tax as explained above,” it said.

On prospects, BAuto is optimistic about the recent launch of its all-new Mazda 3, Mazda CX-8, and the Mazda CX-5 (which includes the 2.5L Turbo variant in Malaysia) and the expected launch of the all-new Mazda CX-30 during the coming quarter.

In the Philippines, it plans to capitalise on the absence of excise duty on pickup trucks to bring in its new Mazda BT-50 model in FY21.

Shares in BAuto fell three sen to RM2.15 yesterday, giving it a market capitalisation of RM2.5 billion. Over the past 12 months, the stock has climbed nearly 11%.