Bermaz Auto quarterly earnings triple on higher sales

Distributor’ s net profit up to RM74mil from RM 22 mil previously

PETALING JAYA: Bermaz Auto Bhd’s (BAuto) earnings more than tripled in the second quarter ended Oct 31, as a result of higher sales during the tax-holiday period.

The group, which is the official distributor of Mazda vehicles and spare parts in Malaysia and the Philippines, saw its net profit rising to RM73.9mil in the quarter from RM22.2mil in the corresponding period last year.

Revenue, meanwhile, increased 46.3% to RM690.3mil from RM471.7mil previously, while earnings per share (EPS) rose to 6.36 sen from 1.93 sen.

BAuto has announced a second interim dividend of 3.75 sen per share for the second quarter.

The company’s shares fell two sen to close at RM2.12 yesterday.

In a statement, BAuto said during the period in review, the group reported higher revenue mainly due to a surge in its sales volume from its domestic operations.

“This was a result of the reduction in the goods and services tax (GST) standard rate from 6% to 0% from June to August, and the group’s announcement to absorb the sales tax for bookings received before Sept 1, but with vehicle delivery after the introduction of the sales and service tax (SST), which boosted demand, especially for the new CX-5 model.

“This was partly offset by weaker sales from the Philippine operations, as the automotive industry of the country is still struggling from the impact of the Tax Reform for Acceleration and Inclusion (Train) law that was implemented in January this year,” BAuto said.

“The Train law has caused an increase in excise tax and consequently car prices have also increased, thus affecting the demand for motor vehicles in the Philippines,” it added.

Meanwhile, the group’s second-quarter pre-tax profit increased substantially by 173.4% to RM94.6mil from RM34.6mil in the preceding year’s corresponding quarter, largely due to higher revenue and improvement in the gross profit margin from the domestic operations, and a significantly higher share of profit contribution from its associate company, Mazda Malaysia Sdn Bhd (MMSB).

“The improvement in the gross profit margin was mainly attributed to a favourable sales mix and a stronger ringgit against the yen, while the higher share of profit contribution from MMSB arose from the increase in production volume for the new CX-5 model to cater to both the domestic and export markets. This was slightly dampened by a lower profit contribution from the Philippine operations, in line with the decrease in their sales volume,” it explained.

For the six-month period, BAuto’s net profit rose almost three-fold to RM124.2mil from RM42.4mil in the previous corresponding period, while its EPS rose to 10.70 sen from 3.68 sen.

The group’s revenue rose 36.2% to RM1.18bil in the first half of financial year 2019 (FY19) from RM862.9mil in the corresponding period last year.

BAuto said the higher sales were due to significant improvement in its sales volume from the domestic operations as the change in the GST from the standard rate of 6% to 0% in June this year.

BAuto said the higher earnings were largely due to revenue and improvement in the gross profit margin from the domestic operations, coupled with a higher share of profit contribution from its associate company, MMSB.

For the remaining six months, BAuto expected its results to remain positive.

“Despite the challenging market trading conditions as mentioned above, BAuto’s Malaysian operations is in a competitive advantage position due to the huge back orders collected during the GST tax holiday as a result of the group’s absorption of the SST.

The bookings collected since the implementation of the SST on Sept 1, remain encouraging due to the upcoming festive seasons,” it said.

As for the decline in the new vehicle market in the Philippines, the group said it would seek to mitigate the downturn impact and sustain its sales volume through more aggressive marketing and support to its dealer network, and growing its number of dealerships from 18 at the beginning of FY18 to 21 dealerships at the end of FY19.