MAIN Market-listed Federal International Holdings Bhd [previously Federal Furniture Holdings (M) Bhd] has posted a stellar financial result for its third quarter ended March 31, 2022.
A filing with Bursa Malaysia today shows that the group’s net profit jumped by more than four times to RM8.7 mil in its 3Q FY6/2022 from RM1.9 mil in the same period a year ago mainly due to recognition of a one-off pre-tax gain on factory disposal of RM6.1 mil.
On a similar note, Federal International’s revenue inched up 4.3% to RM42.6 mil in the quarter under review from RM40.8 mil in 3Q FY6/2021. The revenue growth was driven mainly by its construction segment.
“Excluding the one-off disposal gain, the group still manage to record a strong double-digit growth on our bottom-line,” commented Federal International’s executive director Datuk Choy Wai Ceong.
“This reflects the resilience of the group’s business models despite the challenges faced during the pandemic.”
Federal International currently has three core business segments, namely manufacturing, interior-fit-out (IFO) and construction. Under its manufacturing division, revenue was up by 15% during the quarter to RM3.1 mil (3Q FY6/2021: RM2.7 mil).
“The manufacturing division saw an increase in its revenue as the total number of stores shipped as well as store sales from Starbucks improved by 27%,” explained Choy.
“However, the gross margin for Starbucks was low due to insufficient sales to absorb fixed factory operating expenses, overheads and additional expenses incurred due to factory re-location and cost of repairing machinery due to flash floods.”
Meanwhile, the IFO division recorded a turnover of RM5.9 mil from inter-segment sales during 3Q FY6/2022 while revenue from the group’s construction business segment improved by 3% to RM39.4 mil during the quarter.
“Going forward, we expect the construction business segment to continue playing an important role to provide earnings visibility for the group,” projected Choy. “Currently, it has three ongoing projects that have a combined contract sum of RM302 mil.”
According to Datuk Choy, the group’s manufacturing division has seen a significant reduction in export orders due to the slowdown in Starbucks retail store expansion in the Asia Pacific region in view of the COVID-19 pandemic.
Prospect for the division now hinges on the extent the pandemic has on its key customer’s store expansion programme and the ability to secure other sales.
Choy also shared that the group is actively exploring new business opportunities that can contribute positively to Federal International’s continued growth.
This includes the collaborations entered into with SPIC Energy Malaysia Bhd and Fabulous Sunview Sdn Bhd by its joint-controlled entity Warrants RE Assets Sdn Bhd in relation to the group’s expansion into the renewable energy business segment.
At the close of yesterday’s (May 26) market trading, Federal International was unchanged at 54 sen with no volume traded while its market capitalisation stood a RM76 mil. – May 27, 2022
