Bauto registers a increase in revenue & PBT
Focus Malaysia 13 Jun 2019 12:24
For the 4th Quarter Ended 30 April 2019
Bermaz Auto Berhad (“BAuto”) registered revenue of RM538.3 million compared to RM570.6 million reported in the preceding year’s corresponding quarter. The 5.7% decrease in revenue was mainly due to lower vehicles sales volume recorded from both the domestic and Philippine operations. During the quarter under review, the sales volume in Malaysia normalised as the Group had fulfilled all back orders received during the tax holiday prior to 1 September 2018.
The sales volume from the Philippine operations continues to be affected by the Tax Reform for Acceleration and Inclusion (“TRAIN”) law that was implemented in January 2018. The TRAIN law has caused an increase in excise tax and consequently car prices have also increased, thus dampening the demand for motor vehicles in the Philippines.
Despite recording lower revenue and a drop in share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd (“MMSB”), the Group’s pre-tax profit for the quarter has improved by 5.3% to RM77.6 million compared to RM73.7 million in the preceding year’s corresponding quarter, largely due to lower operating overheads. The lower share of profit contribution from MMSB was mainly attributed to the lower production volume for the CX-5 model due to the anticipation that sales will normalise over the next few months. The Group also accounted for the expense of the Group’s Employees’ Share Scheme (“ESS”) amounting to RM1.2 million in the quarter under review.
For the Financial Year Ended 30 April 2019
The Group registered a significantly higher annual revenue of RM2.49 billion compared to RM1.99 billion in the preceding year’s corresponding period due to robust sales volume growth from the domestic operations as the change in the Goods and Services Tax ("GST") from the standard rate of 6% to 0% from June to August 2018 as well as the Group's offer to absorb the Sales and Service Tax (“SST”) for bookings received prior to 1 September 2018 had boosted demand, in particularly the SUV models. This was partly offset by the contraction in sales volume from the Philippine operations as its sales was impacted by the TRAIN law.
The Group's pre-tax profit also increased by 73.7% to RM342.3 million from RM197.1 million reported in the preceding year’s corresponding period, largely due to higher revenue and improvement in gross profit margin from the domestic operations, and a significantly higher share of profit contribution from MMSB. The improvement in the domestic gross profit margin was primarily due to the favourable sales mix towards high value models and favourable foreign exchange movement, while the higher share of profit contribution from MMSB was mainly due to an increase in production volume for the new CX-5 model. Nonetheless, this was partly offset by a lower profit contribution from the Philippine operations due to weaker sales and compressed profit margin. The Group also accounted for the expense of the Group’s ESS amounting to RM2.7 million during the financial year.
The Board has recommended a fourth interim dividend of 3.5 sen single-tier dividend per share and a special dividend of 7.0 sen single-tier dividend per share in respect of the financial year ended 30 April 2019 (previous year’s corresponding quarter ended 30 April 2018: 2.30 sen single-tier dividend per share and a special dividend of 2.70 sen single-tier dividend per share) to be payable on 25 July 2019. The entitlement date has been fixed on 10 July 2019. The total dividend declared for the financial year ended 30 April 2019 amounted to 21.25 sen single-tier dividend per share (previous financial year ended 30 April 2018: 10.40 sen single-tier dividend per share) and this is the highest dividend per share declared since the listing of BAuto in Bursa Malaysia.
Based on the number of ordinary shares in issue and with voting rights as at 12 June 2019 of about 1.160 billion, the fourth interim dividend and special dividend distribution on aggregate for the financial year ended 30 April 2019 will amount to RM121.78 million. The total dividend distribution for the financial year ended 30 April 2019 is approximately RM246.5 million, representing about 93% of the attributable profit of the Group for the financial year ended 30 April 2019.
Bank Negara Malaysia ("BNM") retained its GDP growth projections at between 4.3% and 4.8% for the calendar year 2019, in line with its first quarter GDP growth of 4.5% that was driven by private sector spending, capacity expansion in key industries and gradual recovery in the commodities sector.
For the calendar year 2019, the Malaysian Automotive Association had forecasted a Total Industry Volume (“TIV”) of 600,000 units after taking into consideration the global economy which is expected to remain subdued. The uncertainties over the ongoing trade war between the USA and China, the review of mega projects by the government post GE14, a persistently weak Ringgit Malaysia and more stringent hire purchase guidelines could further affect local consumer sentiment. However, the expected launch of the all new Mazda3, CX-8, CX-30 and the new facelift of the ever popular CX-5 model which includes the 2.5cc Turbo variant in Malaysia in the second half of the calendar year 2019 may mitigate some of these challenges.
The BNM announcement in early May 2019 on cutting its Overnight Policy Rate (OPR) by 25 basis points to 3%, may mean lower hire purchase interest rates and is expected to boost consumer spending which will also impact positively on the growth of the TIV.
In the Philippines, the economy is forecasted to remain vibrant with the recent announcement of the first quarter GDP at 5.6%, slower than 6.3% in the previous quarter, as delays in passing the budget stalled government spending. This has resulted in the Philippines Central Bank reducing the interest rate by 25 basis points to 4.5% for the first time since October 2012.
The new vehicle market continued to be low, largely attributed to the implementation of the TRAIN law in January 2018. This has resulted in the contraction of demand for most, if not all, auto brands and the Group's operations in the Philippines is not spared. The total sales volume for the first 4 months of the calendar year 2019 declined to 111,187 units from 111,620 units in the previous year corresponding period. Bermaz Auto Philippines Inc. seeks to preserve its sales volume through the growth in the number of dealerships and the launching of new models during the next financial year.
In view of the foregoing, the Directors anticipate the performance of the Group for the financial year ending 30 April 2020 to remain satisfactory.