SINGAPORE (July 17): Malaysian-based automotive distributor and parts manufacturer MeGroup today announced that earnings for FY20 dipped 10.3% to RM1.2 million ($0.4 million) from RM1.4 in FY19, due to higher expenses incurred for new dealerships.
This brings EPS for FY20 to 1.05 sen from 1.28 sen in FY19.
Revenue for the final year ended March came in at RM245.8 million, 1.0% higher than RM243.5 million in the previous year, led by higher contribution from the company’s manufacturing business but partially offset by lower contribution from its dealership business.
Revenue from the manufacturing business increased by 9.28% y-o-y to RM39.5 million, mainly due increase of demand in the volume of noise, vibration and harshness (NVH) components supplied.
Revenue from the dealership business saw a slight 0.5% y-o-y fall to RM206.3 million
With cost of sales remaining flat y-o-y at RM219 million, FY20 gross profit was RM26.5 million, 8.0% higher than RM24.5 million last year. The average monthly revenue from April 2019 to February 2020 (11 months) was RM17.7 million as compared to average monthly revenue of RM17.27 million in FY19.
The improvement is due to full year operations of Honda Kuala Selangor in FY20 as compared to a period of 4 months operations in FY19 and the new body and paint division in Honda Cheras which started operation in October 2019.
However, only RM11.5 million of revenue were recorded in March 2020 as sales have been affected during March 2020 due to the Movement Control Order imposed by the government of Malaysia to curb the spread of Covid-19 in Malaysia. All showroom and service centres were closed down from March 18, 2020 to May 1, 2020 and had resulted in the overall decrease of revenue in FY20.
Overall expenses increased during this period, due to higher expenses incurred as the company invested in the new Hyundai and Ford dealerships.
Selling and distribution expenses saw a 0.4% y-o-y increase to RM4.5 million; administrative expenses increased by 16.7% to RM17.2 million; and finance expenses were 52.1% higher y-o-y at RM2.9 million.
As at end-March MeGroup’s cash and cash equivalents stood at RM11.3 million.
The group during its IPO mentioned that it will set up an R&D facility for its manufacturing business, and has since started utilising the newly built R&D lab which will primarily be used for internal research and validation purposes.
The lab is expected to complement the group’s existing manufacturing capabilities for better quality control on product offerings. The manufacturing business also secured several new projects from various well-known automobile brands, and have expanded its customer base to other industries through the supply of similar products.
On the dealership front, the group’s response to the MCO brought about by Covid-19 was to leverage on its existing digital presence. Itimproved its online footprint through the use of social media platforms and other online marketing strategies. The use of technology will continue to be adopted to streamline operational efficiencies. An online appointment booking system has also been implemented.
Wong Cheong Chee, chairman and CEO of MeGroup says, “The Covid-19 pandemic and Malaysia government’s subsequent implementation of the MCO has adversely affected many businesses including ours. We had to completely stop work in our manufacturing and dealership businesses, construction of our new dealership had to be placed on hold, upgrading works had to stop. However, we took this opportunity to implement new ways to carry out our operations such as boosting our online presence and streamlining our work processes.”
“We are pleased to also have been able to fulfil our IPO promise of setting up an R&D lab for the manufacturing business. We continually strive to be at the forefront of our industry, and we are currently the only NVH supplier in Malaysia with such an R&D facility. This lab will value-add to the products we manufacture and bring about higher credence for future potential customers to work with us.”
Shares in MeGroup closed at 15 cents.
