Fu Yu Corporation Limited: 1H25 Financial Analysis & Outlook

Fu Yu Corporation Limited, a Singapore-based precision plastics manufacturer, released its unaudited interim results for the six months ended 30 June 2025. The following analysis presents key financial metrics, performance trends, and management commentary, structured for investor clarity.

Key Financial Metrics

Performance Summary

• Revenue: The Group’s revenue dropped 52.3% YoY to \$60.5 million, due to the discontinuation of its Supply Chain Management segment in late FY2024. However, manufacturing revenue increased by 10.4%.
• Gross Profit: Gross profit fell 19.4% YoY to \$6.8 million, with gross margin from manufacturing at 11.3% (down from 12.9%). The overall margin improved to 11.3% from 6.7%, reflecting a better revenue mix and upfront tooling expenses for new projects.
• Net Profit: The Group reported a net loss of \$9.6 million, versus a small profit of \$72,000 in 1H24. This was driven by exceptional expenses, foreign exchange losses, and one-off professional fees.
• EPS: Earnings per share swung from positive to negative, reflecting the net loss.
• Balance Sheet: Shareholders’ equity declined to \$125.0 million, and net asset value per share fell to 16.4¢. The Group remains in a net cash position, with cash and cash equivalents at \$46.0 million.

Exceptional Items and Expenses

• Professional Fees: Selling and administrative expenses rose 29.2% to \$11.9 million, mainly due to \$2.2 million in professional fees related to corporate investigations and shareholder actions.
• Bad Debts & Provisions: The Group wrote off \$553,000 in bad debts and made a \$3.0 million provision for closure costs related to the liquidation of its Zhuhai facility in China.
• Foreign Exchange Loss: The Group incurred a \$2.9 million FX loss, primarily due to depreciation of the US Dollar against regional currencies, impacting the Group’s net US Dollar asset position.

Segmental Performance

• Singapore Manufacturing: Revenue up 33.3% to \$28.0 million, driven by consumer segment growth. However, the segment posted a loss before tax of \$5.2 million.
• Malaysia Manufacturing: Revenue down 3.4% to \$17.2 million, with profit before tax falling to \$0.7 million.
• China Manufacturing: Revenue down 4.4% to \$15.3 million, loss before tax deepened to \$5.4 million.

Cash Flows

• Operating Cash Flow: Outflow of \$4.6 million, compared to an inflow of \$4.0 million in 1H24, due to increased inventories and receivables, and net losses.
• Investing Cash Flow: Outflow of \$2.0 million, primarily for capital expenditures on machinery and software.
• Financing Cash Flow: Outflow of \$0.6 million, mostly for lease liabilities repayment.

Dividends

No interim or final dividend was recommended or declared for 1H25, as the Group is in a net loss position. This is unchanged from the previous year.

Chairman’s Statement & Management Commentary

The Chairman and CEO’s statement acknowledged a challenging period marked by exceptional costs, foreign exchange losses, and restructuring. However, management emphasized successful new project wins (\$23.2 million in new manufacturing contracts), ongoing cost-reduction initiatives, and strategic consolidation (including the closure of the Zhuhai facility). The tone is cautiously optimistic, highlighting operational resilience and a strong balance sheet, while warning of ongoing industry headwinds and geopolitical risks.

Events Impacting Performance

• Corporate Investigations: The financial statements carry a qualified audit opinion due to ongoing investigations into Fu Yu Supply Chain Solutions Pte Ltd. The Maxwellisation process is underway, with legal counsel involved.
• Restructuring: The Group is consolidating its China manufacturing footprint, with the liquidation of the Zhuhai facility expected to deliver long-term cost savings despite current one-off expenses.
• Market Risks: Management is monitoring US tariff policy changes and industry recovery pace, with plans to mitigate FX risk and further streamline operations.

Outlook

• The Group is actively expanding its customer base and project pipeline, focusing on higher-value manufacturing contracts.
• Headwinds in global manufacturing—tariffs, economic recovery uncertainties—may slow near-term progress.
• Cost containment and operational consolidation should yield margin improvements over time.
• Professional fees are expected to decline in the second half of 2025.
• The Group’s net cash position and strong balance sheet provide resilience against ongoing volatility.

Conclusion

Fu Yu Corporation Limited’s 1H25 financial performance was weak, driven by sharp revenue decline and significant exceptional expenses, restructuring provisions, and foreign exchange losses. Despite this, the company remains net cash positive and is executing strategies to improve future margins and diversify revenue streams. The outlook is cautiously optimistic, with recovery dependent on successful cost management, project execution, and stabilization of the macroeconomic environment.

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