Bermaz Auto posts RM22m profit in Q4

PETALING JAYA: Bermaz Auto Bhd’s net profit (BAuto) for the fourth quarter ended April 30, 2017 fell 56.97% to RM22.21 million from RM51.62 million a year ago mainly due to lower revenue and compressed profit margin.

In a filing with Bursa Malaysia yesterday, the group said the compressed profit margin was due to the ringgit’s weakness against the Japanese Yen.

“The contraction in profit margin was also partly caused by the Mazda CX-5 run-out programme as more sales incentives were given for this model during the current quarter in anticipation of the arrival of the all new CX-5 model in the last quarter of this calendar year,” it said.

However, this was mitigated by the higher profit contribution from associate companies and cost saving initiatives, which kept the group’s operating expenses low.

Revenue for the quarter fell 33.79% to RM354.03 million from RM534.71 million a year ago due to lower domestic sales volume on the back of sluggish consumer demand caused by the rising cost of living and weak job market.

“In addition, local competition was more intense during the quarter, with some distributors offering enormous cash incentives at an unprecendented level, thus putting further pressure on the group’s strategy to sell at full price with value-added packages,” it said.

For the financial year ended April 30, 2017 (FY17), net profit fell 39.76% to RM119.05 million from RM197.63 million a year ago while revenue fell 20.80% to RM1.66 billion from RM2.10 billion a year ago.

The board has recommended a fourth interim dividend of 3.15 sen single-tier dividend per share in respect of FY17, payable on July 26, 2017. The entitlement date has been fixed on July 11, 2017.

The total dividend declared for FY17 amounted to 11.65 sen single-tier dividend per share, compared with 16.90 sen single-tier dividend per share declared for FY16.

BAuto expects the domestic automotive industry for FY18 to be challenging, on the back of Malaysian Automotive Association’s total industry volume (TIV) forecast of only 590,000 units for 2017.

“Demand for passenger cars is expected to be soft as the weak job market and uncertainties in the local and global economic landscape will likely cause customers to defer their purchases,” it said.

The group said it will continue to focus on driving sales at full selling price with value offerings despite the challenging environment, as the strategy will augur well for the Mazda brand image and popularity in the longer term.

It is optimistic that new model launches planned for the second half of FY18 will help mitigate the impact from the soft domestic market.

In the Philippines, strong economic data with growing overseas remittances and low unemployment rate is expected to boost demand for passenger cars, which augurs well for Bermaz Auto Phiilippines Inc.