KUALA LUMPUR (May 28): Brahim’s Holdings Bhd's net profit fell 31.7% to RM2.84 million or 1.2 sen per share for the first quarter ended March 31, 2015 (1QFY15) from RM4.16 million or 1.82 sen per share a year ago, largely due to lower contribution from its in-flight catering and related services segment.
It attributed the lower quarterly profit to price cutting implemented by Malaysia Airlines (MAS) under its Recovery Plan as well as the concessions agreed with MAS under a settlement deal dated Feb 26, 2015 which included a 25% reduction of the monthly final bill to the national carrier.
The profit for this in-flight catering and related services segment, which accounted for about 75% of its revenue, was lower at RM8.83 million in 1QFY15 compared with RM15.27 million in 1QFY14.
Nevertheless, net loss position of the food and beverage segment for 1QFY15 improved to RM249,000 compared with a loss of RM348,000 a year ago, arising from the implementation of a turnaround plan for this segment.
The group's quarterly revenue, meanwhile, also slipped 7.3% to RM85.73 million from RM92.47 million a year ago, on a 7.39% decrease in revenue from in-flight catering and related services to RM83.20 million from RM89.84 million in 1QFY14.
Brahim’s did not declare any dividend for the current quarter.
Going forward, Brahim’s expects a challenging outlook despite forecasting an increase in passenger load in the second quarter of this year.
“Revenue from in-flight catering and cabin handling services to MAS is expected to be consistent with the previous period. However, profit margins from these activities may be affected due to the implementation of the revised pricing under the new catering agreements, which are currently under the negotiation process,” it said.
Brahim’s added that revenue from foreign airlines is also expected to improve due to incoming new airline clients in 2015.
The stock has fallen 34.06% from RM1.38 on Feb 23, 2015 to close at 91 sen today, with 354,000 shares traded, giving it a market capitalisation of RM218.56 million.
(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)