Snippets
BAuto record breaking quarterly revenue and pbt
Focus Malaysia 14 Mar 2019 11:13

For the 3rd Quarter Ended 31 January 2019
Bermaz Auto Berhad (“BAuto”) registered an all-time high quarterly revenue of RM778.1 million from RM559.4 million reported in the preceding year’s corresponding quarter. The significant increase of 39.1% was mainly due to higher vehicle sales volume that was driven by strong domestic demand for Mazda vehicles, particularly the SUV models. During the quarter under review, the Group is still fulfilling back orders on some of the more popular models as many customers took advantage of the Group's offer to absorb the Sales & Services Tax ("SST") for bookings received prior to 1 September 2018 but vehicle delivery made after the re-introduction of the SST. The Philippine operations continued to be affected by the Tax Reform for Acceleration and Inclusion ("TRAIN") law that was implemented in January 2018, resulting in an increase in excise tax and consequently causing car prices to increase, thus dampening the demand for motor vehicles in the Philippines.

The Group also registered a significant increase of 79.7% in pre-tax profit to RM102.8 million from RM57.2 million in the preceding year’s corresponding quarter due to higher revenue from the domestic operations and a significantly higher share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd ("MMSB"). The higher share of profit contribution from MMSB was mainly attributed to an increase in production volume for the new CX-5 model to cater for both the domestic and export markets. Profit contribution from the Philippine operations was lower as a result of weaker sales and compressed profit margin. The Group also accounted for the expenses of the Group’s ESS amounting to RM1.5 million in the quarter under review.

For the 9-month period
The Group registered a higher revenue of RM1.95 billion compared to RM1.42 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% for June to August 2018 as well as the Group's offer to absorb the SST for bookings received prior to 1 September 2018 had boosted demand, particularly for the SUV models. The Philippine operations continued to register lower sales which was impacted by the TRAIN law.

The Group's pre-tax profit also increased significantly by 114.1% to RM264.6 million from RM123.6 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 favourable sales mix and 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 to cater for both the domestic and export markets.

The Philippine operations contributed lower profit to the Group as a result of weaker sales and compressed profit margin.

Dividend
The Board has recommended a third interim dividend of 4.5 sen single-tier dividend per share in respect of financial period ended 31 January 2019 (previous year corresponding quarter ended 31 January 2018: 2.30 sen single-tier dividend per share) to be payable on 25 April 2019. The entitlement date has been fixed on 9 April 2019. The total dividend declared for the financial period ended 31 January 2019 amounted to 10.75 sen single-tier dividend per share (previous financial period ended 31 January 2018: 5.40 sen single-tier dividend per share).

Future Prospects
Total Industry Volume (TIV) in Malaysia for calendar year 2018 was 598,714 units or 3.8% higher year-on-year, while Mazda's sales volume for the same period has grown by 67% year-on-year. For calendar year 2019, the Malaysian Automotive Association (MAA) has forecasted a TIV of 600,000 units after taking into consideration the global economy which is expected to remain subdued. The uncertainties over the on-going trade war between USA and China, fall in prices of crude oil and commodities, review of mega projects by the new government post GE14, a persistently weak Ringgit Malaysia and a more stringent hire purchase guideline could further affect local consumer sentiment. However, the expected launch of the all new Mazda3 and CX-8 models in Malaysia may mitigate some of these challenges.

In the Philippines, although the economy is forecasted to remain vibrant with an expected GDP growth of 6.3% for 2019, the new vehicle market continued to be low as a consequence of the implementation of the TRAIN law in January 2018. This has resulted in the contraction of demand for most, if not all, auto brands, including Mazda. Bermaz Auto Philippines Inc. seeks to preserve its sales volume through the growth in its number of dealerships.

In view of the foregoing, the Directors are of the view that the Group's performance for the remaining quarter will remain satisfactory.



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