New Mazda CX-5 to launch in Malaysia in 2017.
KUALA LUMPUR: Bermaz Auto Bhd
’s (formerly Berjaya Auto Bhd) earnings fell 40% to RM119.05mil for the financial year ended April 30, 2017 (FY17) on lower sales and tight profit margin.
The Mazda car distributor told Bursa Malaysia that its revenue slid 21% to RM1.66bil due to lower sales volumes in both its markets, Malaysia and the Philippines.
Local sales were impacted by soft demand as Malaysia’s total industry volume shrank by 13% in calendar year 2016.
In the Philippines, the slide in sales volume was mainly due to new model launches by its competitors and supply constraints on a certain Mazda model.
In addition, it said, the ringgit continued to be weak against the Japanese yen, thus compressing its profit margin.
For the fourth quarter ended April 30, the company's earnings were more than halved (-57%) to RM22.21mil from a year earlier while revenue fell by about a third to RM354.03mil.
It attributed the dip in group revenue to lower domestic sales volume, as the rising cost of living and weak job market had caused consumer demand to be sluggish.
“On top of that, local competition was more intense during the current quarter with some distributors offering enormous cash incentives at an unprecedented level, thus putting further pressure on our strategy to sell at full price offered with value added packages,” Bermaz Auto said.
On the reduced profit, it cited the fall in revenue and compressed profit margin as the main reasons.
“The contraction in profit margin was also partly caused by the Mazda CX-5 run-out programme as more sales incentives were given for this model during the current quarter in anticipation of the arrival of the all new CX-5 model in the last quarter of this calendar year,” the company explained.
However, the impact was cushioned by higher profit contribution from associate companies and cost-saving initiatives which kept the group’s operating expenses low, it added.
On prospects for this financial year, Bermaz Auto said the domestic car industry outlook was expected to be challenging as evidenced by Malaysian Automotive Association’s total industry volume forecast of only 590,000 units for calendar year 2017 (a marginal 1.7% growth over 2016).
“Demand for passenger cars is expected to be soft as the weak job market and uncertainties in the local and global economic landscape will likely cause customers to defer their purchases,” it said.
“However, the company will continue to focus on driving sales at full selling price with value offerings as this will augur well for the Mazda brand image and popularity in the longer term.”
The group said it was optimistic that new model launches planned for the second half of this financial year would help mitigate the impact from an expected soft domestic market.
As for the Philippines, it said strong economic data with growing overseas remittances and low unemployment rate were expected to boost demand for passenger cars there.
The board has recommended a fourth interim dividend of 3.15 sen per share in respect of FY17 (Q4 FY16: 2.50 sen) and a special dividend of 7.50 sen per share to be payable on July 26.
The total dividend declared for FY17 amounted to 11.65 sen per share (FY16: 16.90 sen).
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