KUCHING: WTK Holdings Bhd has delivered sharply higher group net profit of RM17.44 million in second quarter ended June 30, 2025 (2Q2025) as compared to RM1.03 million a year ago despite a drop in revenue by RM36.2 million (-21%) to RM138.2 million from RM174.4 million.
A big portion of the profit came from the recognition of RM13 million of insurance claims as income related to the fire that damaged the group’s tapes manufacturing plant in Penang recently.
The group’s loss-making timber business has returned to profitability in the current quarter under review, recording RM650,000 pre-tax profit, as the group ceased its plywood manufacturing activities and sold timber subsidiaries. WTK reported increased earnings per share of 3.73sen from 0.22sen in 2Q2024.
In the current quarter under review, the plantation segment generated higher revenue of RM78.69 million (2Q2024:RM75.14 million), driving the segment pre-tax profit to RM11.18 million (RM7.65 million), thanks to higher production of fresh fruit bunches (FFBs), the company said in explanatory notes to its financial results.
The food segment also reported improved sales, with its revenue surged by 22 per cent to RM33.2 million (RM27.23 million). WTK attributed the revenue growth to increased market penetration, broader products range, rising consumer demand and the opening of a new retail outlet in the current quarter.
However, the increased revenue did not translate into higher earnings as the segment pre-tax profit had instead slipped to RM1.21 million (RM1.53 million) due to intense price competition, higher material costs and compressed profit margins.
The tapes segment registered a big drop in revenue to RM10.84 million (RM15.24 million) because of operational disruptions caused by the fire accident at its manufacturing plant in January this year.
However, the segment pre-tax profit surged to RM11.4 million (RM1.21 million), mainly attributed to the recognition of RM13 million of insurance claims as income.
The timber segment revenue fell steeply to RM15.5 million (RM56.64 million) mainly because of the cessation of plywood manufacturing operation and the scaling down of logging operations related to the proposed disposal of logging subsidiaries.
But the segment returned to the black with pre-tax profit of RM650,000 (-RM1.43 million) as a result of reductions in fixed overheads resulted from the scaled-down operations.
The others segment revenue jumped to RM8.98 million (RM1.76 million) mainly from dividends received from a subsidiary which has been eliminated at group level.
But the segment pre-tax loss widened to RM2.94 million (-RM2.42 million) because of legal and professional fees incurred in the proposed disposals of subsidiaries and incorporation of Sukuk programme during the period.
As compared to the immediate precedent quarter (1Q2025), WTK had done well in the current quarter under review, with pre-tax profit of RM17.5 million, a reversal from loss of RM17.53 million in 1Q2025 despite drop in revenue to RM138.2 million from RM156.6 million.
The plantation segment revenue shrank to RM78.69 million (1Q2025:RM80.14 million), resulting in marginal drop in pre-tax profit to RM11.18 million (RM11.76 million) due to lower selling price of FFBs.
The food segment also reported lower sales of RM33.2 million (RM34.8 million), dragging down its pre-tax profit to RM1.21 million (RM2.4 million) due to higher material costs and compressed profit margins. The tapes segment sales decreased to RM10.84 million (RM12.1 million) but it recorded pre-tax profit of RM11.4 million (-RM22.53 million). In 1Q2025, the group booked write-off and impairments of assets and inventory of RM22 million after the fire incident at the Penang manufacturing plant.
The timber segment revenue nosedived to RM15.5 million (RM29.6 million) but returned to profitability with pre-tax profit of RM650,000 (-RM5.62 million).
The others segment recorded significant higher revenue of RM8.98 million (RM1.77 million) but suffered wider pre-tax loss of RM2.94 million (-RM1.46 million).
In first half year of 2025 (1H2025), WTK sank into the red with group net loss of RM3.97 million from profit of RM6.35 million in 1H2024 as revenue fell to RM294.7 million from RM333.4 million recorded last year.
In 1H2025, the plantation segment performed well, with its revenue shot up by about RM19.3 million to RM158.83 million (1H2024:RM139.57 million), driving pre-tax profit to RM22.94 million (RM18.59 million).
The food segment revenue grew significantly to about RM68 million (RM53.1 million), pushing up pre-tax profit to RM3.61 million (RM3.18 million) whereas the tapes segment revenue plunged to RM22.94 million (RM33.6 million) and incurred pre-tax loss of RM11.13 million (+RM3.35 million).
The timber segment revenue more than halved to RM45.1 million (RM107.2 million) and its pre-tax loss worsened to RM4.97 million (-RM4.64 million).
Commenting on prospects, WTK anticipates the plantation segment to contribute to the group’s overall growth following the completion of 100 per cent equity interest in plantation firm Durafarm Sdn Bhd.
“The group currently has a good combination of immature, young and prime age crop profile, with approximately 48 per cent of oil palms aged 9 to 14 years and around 35 per cent aged less than 9 years.
As the immature, young and prime age crops entering higher yielding age brackets, the performance of the plantation segment is projected to improve and contribute positively to the group’s results in the financial year ending December 31, 2025 (FY2025),” it said.
WTK is also upbeat about the performance of its food segment as following the expansion of cold room capacity, broadening of the products range and set up of new sales outlets, the segment is steadily enhancing its market position to act for the increasing demand for frozen food.
On the outlook for the tape segment, WTK maintains a cautious perspective in light of the impact of the recent factory fire and the competitive business environment.
WTK said it maintains a prudent outlook for the performance of the timber segment for FY2025 as its overall financial position is expected to be enhanced with the cessation of plywood manufacturing operations and disposals of timber subsidiaries.
“The group is undertaking a strategic realignment to concentrate on business segments that offer greater commercial viability, sustainability and profitability.
“In light of the on-going challenges within the timber and tapes segments, the group will prioritise its plantation and food operations, which have consistently exhibited robust growth potential and improved profitability.
“Divestments from non-core timber assets will enable the group to sharpen its focus and optimise resource allocation towards segment with stringer long-term prospects,” it added. In FY2025, WTK expects the group to achieve satisfactory financial results.
