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Quarterly Report For The Financial Period Ended 30 December 2023

Financials Archive

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Condensed Consolidated Statements Of Profit Or Loss And Other Comprehensive Income
For The Quarter Ended 31 December 2023 - unaudited

Income Statement Ended 31 December 2023

The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the audited financial statements for the year ended 31 December 2022 and the accompanying explanatory notes attached to these interim financial statements.

Condensed Consolidated Statements Of Financial Position
As At 31 December 2023 - unaudited

Balance Sheet Ended 31 December 2023

*Net assets per share is calculated based on total share capital in issue less treasury shares of 6,105,700.

The above condensed consolidated statement of financial position should be read in conjunction with the audited financial statements for the year ended 31 December 2022 and the accompanying explanatory notes attached to these interim financial statements.

Operating Segments Review

Statement of Financial Position

The Group's financial standing remained robust with shareholders' fund of RM1.4 billion and a net cash position of RM364.3 million as at 31 December 2023 (i.e. cash and cash equivalents plus other investments (current asset) and deduct bank borrowings). Likewise, the Group's current ratio (i.e. Current Ratio = Current Assets/Current Liabilities) also improved from 2.46 times to 2.47 times mainly due to higher cash and cash equivalents by RM125.6 million or 35.6% in Q4'2023 compared to 31 December 2022.

The net assets per share of the Group increased by 11.0% from RM6.59 as of 31 December 2022 to RM7.31 as of 31 December 2023, mainly due to net profits achieved for the year, coupled with the revaluation gain arising from the revaluation exercise carried out on the Group's properties and favourable effects of foreign currency translation for the Group's foreign subsidiaries and joint ventures.

Statement of Cash Flow and Capital Expenditure

For the current quarter ended 31 December 2023, the Group recorded a net increase in cash and cash equivalents of RM125.6 million from RM353.1 million as of 31 December 2022 to RM478.7 million as of 31 December 2023. The positive cash flow movement was attributed to the following factors:-

  1. Net cash generated from operating activities of RM225.7 million that was mainly driven by pre-tax profit of RM108.3 million and the quicker turnover of trade receivables which resulted in positive changes of RM72.7 million;
  2. Net cash used in investing activities of RM47.4 million that was mainly for the Group's investment in an associate in Malaysia amounting to RM25.2 million, other investment amounting to RM4.0 million and the purchase of tooling, machineries and equipment amounting to RM17.4 million; and
  3. Net cash used in financing activities of RM54.5 million mainly for payment of the second interim dividend for the financial year ended 31 December 2022 and payment of interim dividend for the financial year ended 31 December 2023 totalling RM27.4 million, payment of dividends to noncontrolling interests amounting to RM18.0 million and repayment of loans and borrowings amounting to RM6.2 million.

As of 31 December 2023, the Group's capital commitment stood at RM17.6 million comprising primarily the Group's investment in tooling, machineries/equipment and development costs for the supply of parts for new vehicle models and the upgrading of production facilities. The capital commitment is funded internally and through bank borrowings.

The Group recognizes that the retention of sufficient cash reserves is essential in the pursuit of growth and expansion. Thus, the Group's liquidity remains intact as the Islamic Medium-Term Notes of up to RM1.45 billion in nominal value can be utilized for future capital investment, if and when required.

Analysis of Performance of All Operating Segments
Q4'2023 vs. Q4'2022

For the current quarter ended 31 December 2023, the Group recorded revenue of RM470.5 million, an increase of 0.3% compared with revenue of RM468.9 million in the corresponding quarter ended 31 December 2022. Demand from the Group's Original Equipment Manufacturer ("OEM") customers in Malaysia remained robust with a high level of backorder bookings, new model launches and year-end promotions.

The Group registered a higher profit before tax ("PBT") of RM34.6 million for the current quarter ended 31 December 2023, an increase of 115% compared with the PBT of RM16.1 million in the corresponding quarter ended 31 December 2022. The higher PBT was contributed by improved margins from the upward price revision received from certain customers and a higher share of profit from the Group's equity accounted associates and joint ventures. The Group's associates contributed share of profit following the commencement of operations and revenue recognition in Q2'2023, instead of share of losses in the same quarter of last year. In addition, one of the joint venture companies in Indonesia contributed higher share of profit for the current quarter due to upward price revision received from the customer.

Year-to-date 2023 ("YTD 2023") vs Year-to-date 2022 ("YTD 2022")

For the financial year ended 31 December 2023, the Group recorded higher revenue of RM1.926 billion, which represents an increase of RM187.2 million or 10.8% compared with revenue of RM1.739 billion in the same period of last year. The improved performance was mainly attributable to higher demand from the Group's OEM customers in Malaysia, as they rushed to fulfil bookings made during the sales tax exemption period and new model launches.

In line with higher revenue, the Group's PBT improved significantly to RM108.3 million compared to PBT of RM54.1 million in the same period last year. The higher PBT was also contributed by the sale of moulds/tooling, upward price revision received from certain OEM customers, and further enhanced by the higher share of profit from the Group's equity-accounted associate and joint venture due to the same reasons explained in the paragraph above.

Suspension Division

For the current quarter ended 31 December 2023, the Suspension Division recorded a slight decrease in revenue by 1.1% (Q4'2023: RM60.5 million; Q4'2022: RM61.2 million). Despite recording lower revenue, the Suspension division registered profit before tax of RM2.6 million compared to loss before tax ("LBT") of RM1.1 million in the corresponding quarter of last year. The improved PBT was mainly driven by the decrease in raw material and energy prices, coupled with lower development expenditure.

For the financial year ended 31 December 2023, the Suspension Division recorded increase in revenue to RM240.2 million (+1.5% compared to the same period last year (‘YoY")) and registered a higher PBT of RM1.9 million compared to a PBT of RM0.6 million in the corresponding period of last year. The increase in PBT was due to the same reasons explained in the paragraph above.

Interior & Plastics Division

For the current quarter ended 31 December 2023, the Interior & Plastics Division recorded an increase in revenue by 5.1% (Q4'2023: RM382.0 million; Q4'2022: RM363.3 million) and an increase in PBT by 57% (2023: RM29.9 million; 2022: RM19.1 million). The improved performance was mainly due to the strong demand from domestic OEM customers, as they continued to fulfil the high-level of backorder bookings and robust demand from new models launched during the year.

For the financial year ended 31 December 2023, the Interior & Plastics Division recorded an increase in revenue by 18.0% (Q4'2023: RM1.522 billion; Q4'2022: RM1.289 billion) and an increase in PBT by 75.8% (2023: RM112.7 million; 2022: RM64.1 million). The improved performance was mainly due to higher demand from domestic OEM customers as they rushed to fulfil bookings obtained during the sales tax exemption period and further contributed by the sale of moulds and tooling and upward price revision received from certain customers.

Electrical & Heat Exchange Division

For the current quarter ended 31 December 2023, the Electrical & Heat Exchange Division registered an increase in revenue by 11.5% (Q4'2023: RM34.3 million; Q4'2022: RM30.7 million) mainly due to higher call-ins from certain OEM customers. Consequently, the Division recorded a lower LBT of RM0.7 million compared to LBT of RM2.3 million in the corresponding quarter of last year.

For the financial year ended 31 December 2023, the Division recorded higher revenue of RM127.0 million (+11.9% YoY) and registered an improved LBT of RM4.8 million (+18.2% YoY) due to the same reasons explained in the paragraph above.

Marketing Division

For the current quarter ended 31 December 2023, the Marketing Division recorded a slight decrease in revenue by 1.4% (Q4'2023: RM59.6 million; Q4'2022: RM60.5 million) mainly due to a slowdown in demand from REM customers. Despite recording a lower revenue, the Marketing Division registered a higher PBT of RM1.5 million (+92.8% YoY) due to reversal of over-provision for freight expenses which were initially anticipated to be higher due to the escalation of conflict in Middle East.

For the financial year ended 31 December 2023, the Marketing Division recorded a lower revenue of RM267.4 million (-10.2% YoY) mainly due to a slowdown in demand from export customers in view of prevailing uncertainties in the global economy. Additionally, the higher export sales in the corresponding period of last year were boosted by deliveries of unfulfilled orders due to the unavailability of shipments during the last quarter of 2021. Despite recording lower revenue, 2023 PBT had increased slightly at RM9.9 million (+1.0% YoY) due to lower freight costs and foreign exchange gains which arose from trade receivable balances denominated in foreign currencies.

Non-Reportable Segment, Malaysia

This segment comprises mainly operations relating to revenue received from sources that include the rental of properties in Malaysia, provision of management services, and engineering and research services for companies within the Group. Revenue generated from these services and sources form part of the intersegment elimination for the total Group's results (as depicted in Note A9). This segment also comprises the Group's investment and participation in associate and the business of casting, machining and assembly of aluminum parts and components to internal and external customers.

For the current quarter ended 31 December 2023, this segment's revenue increased by 1.8% to RM13.6 million from RM13.3 million in Q4'2022, mainly due to higher inter-group billing of services. This segment recorded lower LBT of RM1.1 million compared to LBT RM2.6 million in the corresponding quarter of last year. The lower LBT was in line with higher inter-group billing and further contributed by the share of profit from an associate in Malaysia following the commencement of revenue recognition in Q2'2023 instead of share of losses recorded in the same quarter of last year.

For the financial year ended 31 December 2023, this segment's revenue increased by 8.1% to RM57.0 million from RM52.7 million in 2022, mainly due to higher inter-group billing of services. This segment registered a lower LBT of RM6.6 million compared to LBT of RM9.0 million in the corresponding period of last year due to the same reasons explained in the paragraph above.

Indonesia Operations

Indonesia Operations refer to the manufacturing and supply of suspension products such as coil springs, shock absorbers and leaf springs as well as the Group's investment and participation in joint ventures and associate in Indonesia.

For the current quarter ended 31 December 2023, the Indonesia Operations recorded revenue of RM20.1 million, a decrease of 29.8% compared to RM28.6 million in the same quarter last year. The decrease was mainly attributable to the slowdown in demand from OEM and REM segment, as customers adopted a cautious approach in light of the upcoming general election in 2024. Consequently, the Indonesia Operations recorded a lower PBT of RM3.2 million in the current quarter compared to a PBT of RM6.9 million in the corresponding quarter of last year mainly due to the lower sales, provisions made for doubtful debts and slow-moving stocks. The decrease in PBT was mitigated by the upward price adjustment received by one of the joint venture companies and the share of profit from an associate following the commencement of operations in Q2'2023 instead of share of losses recorded in the same quarter of last year.

For the financial year ended 31 December 2023, Indonesia operations recorded revenue of RM87.5 million, a decrease of 16.6% compared to RM104.9 million in the same period last year. The decrease was due to sluggish export demand and the unavailability of certain material sizes that affected production and sales. In line with the decrease in revenue, 2023 PBT decreased to RM1.5 million compared to PBT of RM2.0 million in the same period last year. The decrease in PBT was mitigated by a higher share of profit from the Group's joint ventures and associate as explained in the paragraph above.

All Other Segments

This business segment refers to the Group's operations in Thailand, Vietnam, Australia, the United States of America ("USA"), the Netherlands and Myanmar ("Operations Outside Malaysia").

For the current quarter ended 31 December 2023, Operations Outside of Malaysia recorded revenue of RM32.3 million (-21.3% YoY), mainly due to the slowdown in Vietnam automotive industry which affected OEM demand for both commercial vehicle and passenger vehicle. Despite the lower revenue, LBT improved to RM0.4 million compared to LBT of RM4.3 million in the corresponding quarter of last year. The improved LBT was contributed by favourable outcome for the duties refund claimed from the Vietnamese Customs.

For the financial year ended 31 December 2023, revenue for this Segment amounted to RM156.2 million (+3.1% YoY) due to higher revenue contribution from the coach and locomotive seat business in Australia, following an increase in demand and the resumption of several delayed projects. In addition, the recovery in the USA market demand also led to higher revenue contribution from USA operations. The increase in revenue contribution from Australia and USA was partly offset by the slowdown in Vietnam operations due to the same reasons explained in the paragraph above. In line with higher revenue, LBT decreased to RM4.8 million compared to LBT of RM6.9 million in the corresponding period of last year. The improved LBT was further contributed by the duties refund explained in the paragraph above.

Commentary On Prospects and Targets, Strategies and Risk

APM is principally involved in the design, manufacturing, assembly and production of automotive and mobility components. The Group's main operations are located in Malaysia, but it is also present in various other jurisdictions, including the United States of America (U.S.), the Netherlands, Australia, Thailand, Vietnam, the Republic of Indonesia and recently, the United Kingdom.

The automotive industry in Malaysia recorded a strong performance for the year 2023. The total vehicle sales in 2023 rose by 11% to a new all-time high of 799,731 units, surpassing the record in 2022 when total vehicle sales hit 721,177 units. According to the Malaysian Automotive Association (MAA), the strong performance was attributable to, amongst others, successful tax-free car bookings, increased socio-political stability, a strong domestic economy, successful launches of new models, including affordable electric vehicles, and improved industry supply chain conditions. (source: https://theedgemalaysia.com/node/697527).

Looking ahead, The Group expects the Malaysia TIV in 2024 to moderate mainly due to the lack of catalysts to sustain the strong momentum from 2023 and weaker economic growth globally and domestically. The rise in geopolitical tension across the world may result in renewed financial market stress and major disruptions to the global economy, which in turn may lead to new inflationary pressures and weaker global growth prospects. Nevertheless, the Group will strive to maintain its focus on long-term strategies for business sustainability and to this end, it will explore feasible mergers, acquisitions, strategic partnerships, joint ventures and alliances, as a way forward to create value for shareholders.