Duty Free International is acquiring OEM producer and supplier United Industries Holdings for a consideration of RM175 million, alongside strategic plans to diversify its business, according to a release dated July 21.

 

The company says that it has been exploring new business opportunities that either complement existing core operations or that will offer a stable and sustainable stream of income, and have identified the manufacturing and supply of automotive parts as a potential business activity.

 

As such, the company has entered a share sale and purchase agreement with Atlan Holdings for 37.7 million ordinary shares, or 100% of the total issued and paid-up share capital of United Industries Holdings.

 

United Industries has over five decades of experience in producing and supplying high-quality

automotive components to OEM in Malaysia. Its primary products and services include the manufacture and supply of plastic and metal fuel tanks, metal stamping parts, screw jacks, tubings, fuel filter pipes, instrument panels, and other automotive production and assembly component parts.

 

The company&rsquo s net profit after tax for the financial year ended Feb 28, 2025 is about RM22.98 million, equivalent to about $6.9 million. Its book value and net tangible asset value is approximately RM90.9 million as at Feb 28.

 

The purchase consideration will be paid in two parts, a 10% refundable sum of RM17.5 million, and a balance purchase consideration of RM157.5 million to be paid on the date of completion of the sale and purchase of the sale shares.

 

The proposed acquisition will be funded by internal resources of the group, including the placement exercises undertaken by the company in 2016 and 2017.

 

Duty Free International has reported earnings of RM53.6 million for the FY2025 ended Feb 28, 2025, a 100% y-o-y increase. For the 4QFY2024, the group reported a 100% y-o-y increase in earnings to RM15.1 million.

 

Earnings per share for the full year came in at 4.47 sens, up from the 1.17 sens reported in the previous year.

 

The group' s revenue for FY2025 dropped 1.4% y-o-y to RM155.1 million, over the RM157.3 million recorded in FY2024.

 

Profit before income tax increased to RM57.5 million for FY2025. The group says that profit growth was primarily due to compensation received from the Ministry of Home Affairs of Malaysia for the compulsory land acquisition of two land lots owned by Duty Free International ' s two subsidiaries.

 

This was partially offset by lower revenue recorded, higher net foreign exchange loss of RM11.8 million and higher employee benefits expenses due to terminations in employment following the permanent closure of Duty-Free complex at Bukit Kayu Hitam.

 

The group says that its core operations comprising the trading of duty free & duty paid goods and non-dutiable merchandise, continued to be profitable.

 

For FY2025, the group reported an operating profit of RM11.1 million, compared to RM14.2 million in the corresponding period of FY2024, before accounting for items related to the compulsory land acquisition at Bukit Kayu Hitam.

 

The group has declared and distributed total dividends of RM25.7 million or 0.65 cents per ordinary share for FY2025.

 

Duty Free International anticipates that the retail business environment in which it operates will continue to be challenging, largely due to the increasing product and operating costs, compounded by inflationary pressures and cautious consumer spending.

 

The permanent closure of the Bukit Kayu Hitam outlet in November 2024, following the compulsory land acquisition, is also anticipated to adversely affect the group' s revenue and profitability in the next financial year.

 

Duty-free retailing group Duty Free International has reported a surge in its earnings for the 3QFY2025 ended Nov 30, 2024 of RM41.6 million ($12.7 million), up 100% from the same period a year ago. 

 

Similarly, the group&rsquo s 9MFY2024 earnings surged by 100% to RM39.8 million from RM8.48 million in the same time period a year before. 

 

However, the group says that this higher profit was primarily attributed to the RM69.6 million compensation received from a compulsory land acquisition for two land lots that it owns under its wholly owned subsidiaries Cergasjaya and Cergasjaya Properties. 

 

The Ministry of Home Affair of Malaysia had first issued a compulsory land acquisition notice to DFI for Lot 1683 Bukit Kayu Hitam and PT2209 Bukit Kayu Hitam, which are both situated in Kubang Pasu District, Kedah in the third quarter of 2024. 

 

This acquisition is to make way for a road construction project required to connect the Bukit Kayu Hitam ICQS Complex in Kedah to the CIQ Sadao facility in Thailand. 

 

The compulsory land acquisition will cause a closure of the group&rsquo s duty-free business at Bukit Kayu Hitam, Kedah, Malaysia. 

 

The company on Dec 15, 2024 said that it is dissatisfied with the compensation awarded and has filed an objection by way of a land reference to the High Court. 

 

Meanwhile, Duty Free International says that this increase in profit was partially offset by expenses related to employee and worker termination compensation, the write-off of property, plant, and equipment and right-of-use assets as well as provisions for legal and professional fees associated with the Compulsory Land Acquisition. 

 

Additionally, the positive impact was partially offset by a lower net foreign exchange gain and a RM1.0 million donation as mentioned above. 

The company recorded a revenue of RM41.2 million in 3QFY2025, a 6.3% increase from the same period a year ago. 

 

The growth is due to increased demand for certain products and change in sales mix.

 

As at Jan 13, the group&rsquo s cash and cash equivalents stood at RM157.3 million for the 3QFY2025, and at RM177.8 million for the 9MFY2025. 

 

The group says that it anticipates that the retail business environment will remain challenging throughout the financial year 2025. 

 

This is largely due to the increasing product and operating costs, compounded by inflationary pressures and cautious consumer spending. Furthermore, the permanent closure of the Bukit Kayu Hitam outlet in November 2024, due to the Compulsory Land Acquisition is expected to have an adverse impact on the group&rsquo s revenue and profitability moving forward.

 

Duty-free retailing group Duty Free International 5SO Limited has received a notice of compulsory land acquisition for several of its land lots in Malaysia, according to an Oct 3 release. 

 

The land lots are currently owned by the group&rsquo s wholly owned subsidiaries, Cergasjaya and Cergasjaya Properties. 

 

The acquisition comprises Lot 1683 Bukit Kayu Hitam and PT2209 Bukit Kayu Hitam, which are both situated in Kubang Pasu District, Kedah. 

 

The acquiring agency for the compulsory land acquisition is the Ministry of Home Affair of Malaysia and will be administered by the Department of Director General of Lands & Mines, Kedah. The latter has since announced that a road construction project is required to connect the Bukit Kayu Hitam ICQS Complex in Kedah to the CIQ Sadao facility in Thailand. 

 

As a result, the group says the acquisition will also affect adjacent lands which " access will be blocked by the new road alignment&rdquo . 

 

The compulsory land acquisition will cause a closure of the group&rsquo s duty-free business at Bukit Kayu Hitam, Kedah, Malaysia, reads the release. 

According to the group, Cergasjaya, the owner of the Duty-Free complex in Bukit Kayu Hitam, has contributed approximately 24% to the group&rsquo s revenue for the financial year ended Feb 29. 

 

Further announcements on the financial impact of the acquisition to the group is expected to be announced upon completion. 

Duty-free retailing group Duty Free International 5SO 0.00% has reported earnings of RM14.0 million ($4.0 million), a 10% y-o-y decrease in earnings for the FY2024 ended Feb 29, compared to its earnings of RM15.6 million for the previous financial year.

 

Earnings per share for the full-year period dropped to 1.17 sen, from 1.3 sen in FY2023.

 

Notably, revenue for the company in FY2024 increased by 3.6% y-o-y to RM157.3 million, compared to RM151.8 million in the year before.

 

The company reported a profit before income tax of RM18.0 million for FY2024, representing an increase of 3.5% compared to the profit before income tax of RM17.4 million recorded in FY2023. 

 

The improvement in profit was mainly contributed by higher revenue achieved coupled with increased net foreign exchange gain of RM1.2 million and decreased rental expenses of RM4.9 million, as well as a decrease in other operating expenses of RM3.8 million. 

 

However, the positive effect was partially offset by a decline of other income of RM4.9 million and increase in employee benefit expenses of RM0.9 million.  

 

As at Feb 29, Duty Free&rsquo s cash and cash equivalents stood at RM177.8 million.

 

With the Malaysian economy expanding only moderately in the final quarter of 2023, the company says it anticipates the retail business environment in which it operates to continue to be challenging.

 

This stems from the escalating product and operating costs due to the weakening of the Malaysian Ringgit against major foreign currencies, along with the added strain of inflationary pressures and a cautious approach to consumer spending,

 

Duty Free says it will persist in improving operational efficiency and effectiveness, including implementing rigorous cost control measures while simultaneously devising strategies to adapt and navigate the constantly evolving business landscape.

Duty Free International has reported earnings of RM4.5 million, up 159% y-o-y from RM1.72 million. Revenue in the same period was up 50.5% y-o-y to RM37.1 million, as its various outlets have resumed operations.

 

In contrast, it was only able to keep three of its outlets open in the year-earlier quarter because of how the pandemic put a halt on travel.

 

The company sees " encouraging signs" of ongoing economic recovery.

 

However, it expects the business environment in which it operates to remain challenging for the current FY2024, because of higher operating costs, inflationary pressures, and a weaker ringgit versus other major currencies.

 

" The group will continue its efforts to enhance operational efficiency and effectiveness including stringent cost control measures whilst concurrently strategise, adapt and navigate through the ever-changing business environment so as to ensure that its core businesses remain resilient," the company says.