How Did Zicom Group Boost Profit 17% While Slashing Debt Amid Trade Wars?
Zicom Group Limited reported a 17% rise in net profit and a significant reduction in debt for FY2025, while adopting a cautious stance on dividends amid ongoing global economic uncertainties.
- Revenue increased 3.2% to S$135.77 million
- Net profit after tax rose 17.07% to S$7.75 million
- Gearing ratio sharply reduced from 37.75% to 10.39%
- Mixed segment performance, growth in green energy and precision engineering, decline in construction equipment
- Confirmed orders down to S$76.13 million from S$127.25 million
Solid Profit Growth Despite Challenging Global Backdrop
Zicom Group Limited has delivered a robust financial performance for the year ended 30 June 2025, reporting a 17.07% increase in net profit after tax to S$7.75 million on the back of a 3.2% revenue rise to S$135.77 million. Earnings per share improved to 3.61 Singapore cents, reflecting operational efficiencies and strategic focus amid a turbulent global economic environment.
Debt Reduction and Strengthened Balance Sheet
One of the standout achievements this year is Zicom’s significant deleveraging. The Group reduced its interest-bearing loans by S$11.28 million, bringing the gearing ratio down sharply from 37.75% to just 10.39%. This was accompanied by lifting a mortgage on one of its properties, underscoring a deliberate strategy to bolster financial resilience against potential global economic shocks, including the ongoing trade war tensions and geopolitical volatility.
Segmental Performance, Winners and Laggards
The Group’s three core segments showed mixed results. The Green Energy, Gas & Marine Equipment segment grew strongly by 14.15%, buoyed by demand for gas processing turnkey projects and a slow but tangible recovery in offshore marine activities. Precision Engineering & Technologies also posted a modest 3.86% increase, driven by rising demand for automation amid labour shortages and digitisation trends. Conversely, the Construction Equipment segment faced a 14.86% decline, impacted by political changes and high interest rates slowing construction activity in Asia, although Australian demand for concrete mixers remained robust.
Order Book and Outlook, Caution Amid Uncertainty
Confirmed orders stood at S$76.13 million, down significantly from S$127.25 million the previous year, with S$57.64 million scheduled for delivery in FY2026. While the Group remains optimistic about sustaining growth in the near term, it acknowledges the hazy outlook beyond next year due to persistent global trade tensions, protectionism, and the risk of stagflation. As a result, Zicom has adopted a conservative financial policy, choosing to withhold dividends to conserve cash and maintain flexibility.
Strategic Positioning for a Volatile Future
Chairman GL Sim highlighted the Group’s ethos of resilience, quoting Confucius, “Our greatest glory is not in never falling, but in rising every time we fall.” Zicom’s focus on debt reduction, operational restructuring, and selective capital management aims to position the company to weather potential downturns while capitalising on pockets of growth in green energy and precision engineering. The Group’s cautious stance on dividends and capital expenditure signals prudence amid an unpredictable global economic landscape.
Bottom Line?
Zicom’s strong profit and debt reduction set a solid foundation, but cautious cash management signals vigilance ahead.
Questions in the middle?
- Will Zicom’s order book rebound to previous levels amid ongoing global uncertainties?
- How will the trade war and protectionism impact demand in key segments beyond FY2026?
- When might the Group resume dividends or share buy-backs given its cautious cash conservation?
