RAM Ratings closely monitoring Bermaz Auto Berhad following recent significant underperformance

Published on 10 Oct 2025.

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RAM Ratings is closely monitoring Bermaz Auto Berhad (Bermaz or the Group) following significant business challenges that led to deterioration in the last two financial quarters’ results. 

Intense price and market competition saw the Group's unit sales declined for a second consecutive quarter, plunging 48.5% y-o-y in 1Q FY Apr 2026 and translating to a 41.9% revenue contraction. With an ageing model line-up pitted against highly competitive Chinese marques, Mazda’s market share declined to 0.9% in 1H 2025 from 1.8% in 2024. Consequently, pre-tax profits plummeted by 80.6% y-o-y on margin compression and losses from associates owing to lower assembly activity. 

Notwithstanding its deteriorating performance, Bermaz’s credit profile is underpinned by its strong reserves. Its balance sheet remains in net cash position, with cash balances amounting to RM354.8 mil, against an outstanding debt load of RM257.9 mil as of end-July 2025. As at 1Q FY Apr 2026, the Group’s interest coverage and annualised operating profit before depreciation, interest and tax (OPBDIT) to debt were 12.2 times and 0.6 times, respectively; adequately meeting the thresholds for its rating. Bermaz has managed to remain profitable throughout the years, even during the COVID-19 pandemic, thanks to its lean cost structure and asset-light business model.

While cashflow generation has diminished, the current balance sheet will provide sufficient headroom for the Group to meet its debt and financial obligations.  Any meaningful recovery in margin compression and earnings, however, will remain contingent on new product launch or refresh that are competitive against Chinese brands and meet changing consumer demand trends. 

RAM expects to conclude the rating review for Bermaz’s debt securities within the next two months and will provide a market update upon completion.

 

Analytical contacts
Lai Jing Wei 
(603) 2708 8239
jingwei@ram.com.my

Thong Mun Wai
(603) 2708 8255
munwai@ram.com.my

 

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Published by RAM Rating Services Berhad
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