Email This Print This Latest Quarterly Results

Quarterly Report For The Financial Period Ended 31 December 2016

Financials Archive

Get Adobe Reader Note: Files are in Adobe (PDF) format.
Please download the free Adobe Acrobat Reader to view these documents.

Condensed Consolidated Statements Of Profit Or Loss And Other Comprehensive Income
For The Quarter Ended 31 December 2016 - unaudited

Income Statement Ended 31 December 2016

The above condensed consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the audited financial statements for the year ended 31 December 2015 and the accompanying explanatory notes attached to these interim financial statements.

Condensed Consolidated Statements Of Financial Position
As At 31 December 2016 - unaudited

Balance Sheet Ended 31 December 2016

The above condensed consolidated statements of financial position should be read in conjunction with the audited financial statements for the year ended 31 December 2015 and the accompanying explanatory notes attached to these interim financial statements.

Operating Segments Review

Analysis of Performance of All Operating Segments
4Q16 vs. 4Q15

The Group registered a revenue of RM340.7 million in the current quarter, an increase of 24.8% against RM273.0 million in the same quarter of 2015, with the Interior & Plastics Division and operations outside Malaysia driving the momentum. The Interior & Plastic Division saw higher demand for OEM parts arising from the commencement of localization in 3Q2016 for certain vehicle models.

The Group's profit before tax jumped significantly by 46.5% to RM26.4 million in 4Q16 from RM18.0 million recorded in the same quarter last year backed by higher sales volume of OEM parts. The lower profit before tax in 4Q15 was also because of an one-off adjustment on inventory value for Interior and Plastic Division.

Year-to-date 2016 vs. Year-to-date 2015

The Group closed the year in review with revenue of RM 1,236.6 million, representing year-on-year revenue growth of 7.3%, buoyed by the higher contribution recorded in the Interior & Plastic Division, Marketing Division and across all countries outside Malaysia.

Nevertheless, the Group profit before tax was down by 12.4% to RM83.2 million, from RM95.0 million in the preceding year owing to the depressed margin experienced in the Interior & Plastics Division and higher operating costs for the newly set-up manufacturing plant in Indonesia. The former was attributed to higher cost for raw materials arising from a weaker ringgit, and unfavourable products-mix.

Segmentation Review
Suspension Division

The Suspension Division saw a decline in revenue by RM8.5 million or 14.4% to RM50.4 million in the current quarter under review as against RM58.9 million in 4Q15. Revenue growth was hampered by the lower off-take from local OEM customers and consequently, the Division experienced a drop in its profit before tax by 12.9% to RM7.5 million in the current quarter from RM8.6 million in the corresponding quarter of the previous year.

Year-to-date, Suspension Division's revenue was weaker by 6.5%, to RM209.7 million from RM224.3 million in last year substantially impacted by the lower off-take from certain OEM parts that have approached their last phase of product life cycle. In contrast, profit before tax was slightly higher at RM23.2 million against RM22.0 million over the previous year boosted by the favourable product mix, particularly products for export markets which command higher margin.

Interior & Plastics Division

In line with the impressive revenue growth of 42.0% to RM242.3 million in 4Q16 against RM170.6 million in 4Q 2015, profit before tax improved significantly in the Interior & Plastics Division to RM13.0 million from RM0.7 million recorded in corresponding quarter of last year. The revenue growth was primarily driven by the new model launches coupled with higher localization content for certain OEM parts for both existing and new vehicle models.

On a year to year basis, the Division's revenue inched up 10.1% to RM830.4 million in 2016 against RM754.0 million a year ago, mainly contributed by the additional RM54.7 million arising from the consolidation of APM Tachi-S Seating Systems Sdn Bhd (previously a joint venture of the group and results were shared in the consolidated income statements) and the launching of new models and higher l localization content for certain OEM parts in the second half of 2016.

Profit before tax, however, fell to RM35.8 million, representing a decline of 18.6% from RM44.0 million recorded in the preceding year. The weakened Ringgit which adversely affected raw material costs together with unfavourable products mix continues to impact the performance of the Division.

Electrical & Heat Exchange Division

In the current quarter under review, the revenue for Electrical & Heat Exchange Division increased by 12.9% to RM47.3 million from RM41.9 million in the same quarter of the previous year. The increase was predominantly attributable to the higher demand from OEM customers following the launches of new models. Despite the higher revenue, profit before tax declined to RM2.7 million from RM5.9 million in 4Q15. The higher profit before tax in 4Q15 was due to reversal of provision recorded in the same period last year.

Revenue for the Division in 2016 was sustained at RM175.2 million, which was a marginal increase of 1.0% from RM173.4 million recorded in 2015. Consistent with the above, profit for the year was lower by 3.3% to RM14.6 million from RM15.1 million last year.

Marketing Division

Marketing division's revenue grew by RM3.4 million, or 6.6% quarter on quarter to RM55.2 million in 4Q2016 driven by promotional activities and stronger export sales to Korea and Australia. Notwithstanding the surge in revenue, profit before tax did not grow and was constant at RM2.0 million in both 4Q2016 and 4Q2015, owing to expenditures incurred on promotional activities and unfavourable products mix.

In 2016, this division posted revenue of RM213.3 million, representing a surge of 19.1% from RM179.1 million recorded in last year. Apart from aggressive promotional and market-driven campaigns and activities and the introduction of new product range during the year, the stronger US Dollar for our export sales has also aided in achieving revenue growth and commendable profit before tax of RM8.6 million from RM7.6 million in the preceding year.

Non-reportable segment, Malaysia

This segment comprises mainly operations relating to the rental of properties in Malaysia, provision of management services and engineering and research services for companies within the Group. The revenue streams were mainly rental and services fee charged within the Group and formed part of inter-segment elimination for the total Group's results (as depicted in Note A9).

Quarter on quarter, revenue grew slightly by 1.5% in the non-reportable, Malaysia segment to RM15.2 million from RM15.0 million whilst its profit before tax stood at RM3.0 million, which was lower by RM0.1 million from the same period in 2015.

On a year-to-date basis, this segment recorded a higher profit of RM2.1 million compared to RM1.3 million in the previous year mainly due to recognition of fair value gain on investment properties of RM2.2 million (2015 : RM0.6 million).

Indonesia Operations

The Indonesia Operations refer to the Group's wholly-owned subsidiaries producing suspension products such as coil spring and leaf spring as well as the Group's investment in joint venture and associates in Indonesia.

Revenue for Indonesia Operations grew more than threefold to RM16.7 million in the fourth quarter of 2016 from RM4.9 million recorded in the corresponding quarter last year thanks to higher demand from OEMs customers and new vehicle models launches.

The Indonesia Operation closed the quarter with a loss of RM4.9 million against a loss of RM3.2 million in the same quarter last year. The higher losses in the segment were owing to depreciation charges from plant and machineries and lower profit contributed by an associate.

For the whole of 2016, the revenue in Indonesia Operation increased by 130.1%, or RM21.6 million to RM38.2 million from RM16.6 million a year ago but its loss before tax deteriorated to RM11.2 million from RM 4.7 million in the preceding year due to factors mentioned above and pre-operating costs for the Group's new manufacturing plant for leaf spring which commenced operations in June 2016.

All Other Segments

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

Revenue from Operations Outside Malaysia remained the key revenue growth driver for the group, registering a surge of 58.5%, quarter on quarter to RM38.8 million dominated by 42.1% growth in the coach seat business in Australia and 74.5% growth in Vietnam operations. Revenue from Australia and Vietnam accounted for 43.3% and 47.2% of the 4Q2016 segment revenue respectively. As a consequence, profit before tax for the segment in 4Q2016 was higher at RM2.6 million as compared to RM0.9 million in 4Q2015. The favourable rate of exchange in translating the overseas operations' performance to Ringgit Malaysia has also partly contributed to both the top and bottom-line growth.

Year-to-date, revenue for this segment grew to RM131.4 million, representing a growth rate of 35.3% from RM97.1 million while its profit before tax was at RM9.9 million, a marginal increase of 4.2% compared to RM9.5 million in previous year. The profitability in this segment was dragged down by the pre-operating costs in Europe, Myanmar and Thailand operations.

Commentary On Prospects and Targets

Malaysian Automotive Association ("MAA") has forecasted its Total Industry Volume ("TIV") for 2017 to be 590,000 units, a marginal increase of 1.7% against 580,124 units in 2016. In 2016, the TIV slipped 13% as compared to 2015 and was the lowest for the past consecutive six years.

With the weakening of the Ringgit and the dampened consumer sentiment, the automotive industry continues to operate in a challenging environment clouded with many economic uncertainties.

The Group expects 2017 to be a challenging year but will remains cautious and optimistic that our ongoing strategies of product innovation and regional expansion will yield positive momentum. We will stay focused in containing our operating cost and grow our top and bottom-line while at the same time, improve operational efficiency and productivity in order for the Group to ride through this challenging time.