Brahim’s posts fourth straight losing quarter on lower meal offtake

by **Cals** Sun 29 May 2016, 23:35

Brahim’s posts fourth straight losing quarter on lower meal offtake

By Yimie Yong / The Edge Financial Daily | May 27, 2016 : 10:51 AM MYT

This article first appeared in The Edge Financial Daily, on May 27, 2016.

KUALA LUMPUR: Lower meal offtake has dragged inflight meals provider Brahim’s Holdings Bhd into its fourth consecutive losing quarter with a net loss of RM5.03 million in the three months ended March 31, 2016 (1QFY16). In comparison, it posted a net profit of RM2.84 million a year ago.

Its latest quarterly revenue was down 29.5% to RM60.45 million from RM85.73 million, its bourse filing yesterday showed.

The group has been in the red since 2QFY15, when it reported a net loss of RM6.81 million. At the time, the decline in earnings was largely attributed to continuing concessions given to Malaysia Airline System Bhd (MAS) under the settlement agreement dated Feb 26, 2015 that it had inked. It had also noted that the operating loss was due to price suppression by MAS under the latter’s recovery plan.

Meanwhile, Brahim’s said the performance of its in-flight catering and related services continued to show a decline quarter-on-quarter and also when compared with a year ago. Segmental earnings from operations were at RM970,000 compared with a profit of RM8.83 million in 1QFY15.

Meanwhile, its food-and-beverage segment’s performance was also weaker compared to a year ago, as revenue declined 52.17% to RM309,000. Operations continued to remain in the red with losses of RM303,000 against the previous year’s RM223,000, due to a four-week closure of one outlet for renovation.

Only its logistics and related services segment saw a marginal improvement of 3.04% in revenue to RM1.87 million, compared to a year ago, while its warehouse occupancy rate remains stable. Segmental profit came in at RM261,000 compared with 1QFY15’s RM223,000, due to certain cost savings.

Moving forward, Brahim’s said its 2QFY16 outlook for the in-flight catering division is expected to be positive mainly due to improvement in flights and meals from its major customer, the new incarnation of Malaysia Airlines Bhd.

“The menu enhancement for the economy class resulted in higher revenue. Revenue from other foreign carriers also continues to show improvement. To manage the rising costs, management will continue cost-saving initiatives that were implemented last year as part of our business survival plan in 2016,” it said.

Meanwhile, in a separate filing, Brahim’s said its 51%-owned subsidiary, Brahim’s SATS Services Sdn Bhd, had signed a service agreement with 7-Eleven Malaysia Sdn Bhd.

According to the memorandum of understanding the two parties entered on April 12, Brahim’s SATS Services shall plan, develop and create menu specifications and products to be marketed through 7-Eleven’s nationwide chain of convenience stores.

7-Eleven will provide a centralised distribution centre for Brahim’s SATS Services to deliver all products and to arrange for their delivery.