Bermaz’s shareholders rewarded

Bermaz Auto Bhd earnings rose 5% year-on-year (YoY) to RM60.06 million in the fourth quarter ended April 30, 2019, as a result of lower operating overheads, despite lower revenue and a drop in profit contribution from its associate company, Mazda Malaysia Sdn Bhd (MMSB).

Quarterly revenue was 5.7% lower YoY at RM538.28 million largely due to lower vehicle sales volumes in Malaysia and the Philippines, it told Bursa Malaysia in a release yesterday.

The lower share of profit contribution from MMSB was mainly attributed to lower production volume of the Mazda CX-5 model in anticipation of sales normalising over the next few months.

“Sales volume in Malaysia normalised as the group had fulfilled all back orders received during the tax holiday prior to Sept 1, 2018. The sales volume from the Philippine operations continued to be affected by the Tax Reform for Acceleration and Inclusion (TRAIN) law that was implemented in January 2018,” its filing stated.

The TRAIN law has caused an increase in excise tax and consequently car prices, which dampened the demand for motor vehicles in the market there, the company said.

For the financial year ended April 30, 2019 (FY19), the group’s net profit jumped 89.5% YoY to RM265.265 million mostly due to higher revenue, improvement in gross profit margin from 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 the 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.

FY19 revenue increased 25.1% YoY to RM2.49 billion on sales volume growth from domestic operations amid a change in the standard rate of the Goods and Services Tax from 6% to 0% from June to August 2018.

The group’s offer to absorb the Sales and Service Tax for bookings received prior to Sept 1, 2018, also boosted demand, particularly for the SUV models.

The firm has recommended a fourth interim dividend of 3.5 sen and a special dividend of seven sen for FY19.

For the financial year in review, its total dividend declared stands at 21.25 sen, marking the highest dividend declared since the group’s listing on the local bourse.

Bermaz expects its performance for FY20 to “remain satisfactory”, driven by new launches and its popular facelifted CX-5 model, as well as lower hire purchase interest rates as a result of a cut in the Overnight Policy Rate in Malaysia.

In the Philippines, the group intends to grow its dealership network and launch new models to mitigate the effects of the TRAIN law, which resulted in total sales volume for the first four months of the calendar year 2019 dropping slightly to 111,187 units from 111,620 units last year, it stated. — TMR