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PETALING JAYA: Berjaya Auto Bhd (BAuto) said its unit in the Philippines is seeking a listing on the local bourse, even as the Mazda vehicles distributor warns of tougher operating conditions at home and abroad.

BAuto, which holds the Mazda franchise in Malaysia and the Philippines, said yesterday that its net profit in the first quarter ended July 31 declined 21% to RM41.1mil on the back of a 3.7% drop in revenue to RM493.6mil.

“The decrease in Mazda vehicle sales volume in Malaysia was largely due to poor consumer sentiment, uncertainties in the local and global economy, and supply constraint on certain complete knock down (CKD) models as the contract assembler’s plant in Kulim was shut down for about five weeks for upgrading works,” said BAuto.

Elaborating on the lower net profit, BAuto said this was due to lower revenue and compressed gross profit margin as the yen strengthened significantly against the ringgit during the period.

BAuto said revenue dropped mainly due to lower sales volume of Mazda vehicles in the domestic market, but this was partially eased by favourable sales mix.

In the Philippines, sales of Mazda3, its top selling model, was hit due to a competitor’s newly launched vehicle, it revealed, adding that other expenses on advertising and promotions, among others had led to lower profit.

Going forward, the demand for vehicles for the next quarters of the financial year is expected to be soft due to the challenging landscape.

“The weakening ringgit against the yen remains an area of concern to the Malaysian operations, as this will impact the profit margin of complete built up vehicles,” said BAuto.

With a market value of RM2.58bil, BAuto said it will focus on selling more CKD vehicles locally to mitigate some its foreign exchange exposure.

In the meantime, it would upgrade its Kulim plant to increase production capacity and maintain sustainable growth, as it intends to produce more CKD vehicles for the local and export markets.

In separate announcement yesterday, BAuto said its 60.4% owned Bermaz Auto Philippines Inc (BAP) is planning to launch an initial public offering (IPO) on the Philippine Stock Exchange.

Berjaya Auto said an announcement will be made once BAP, a company set up in the Philippines has finalised details of its listing proposal and the board of BAuto has approved it.

In June, it was reported that Berjaya Corp Bhd planned to dispose of its remaining 9.09% stake in BAuto, held under wholly-owned unit Berjaya Group Bhd, to a special purpose vehicle (SPV) for RM218.61mil or RM2.10 per BAuto share.

This was to be satisfied by cash and new securities in the SPV. The stake was reported to comprised of 113 million shares.

BAuto shares closed down 3 sen or 1.32% at RM2.25 yesterday.