KUALA LUMPUR (May 28): The automotive light-emitting diode (LED) maker D&O Green Technologies Bhd (KL:D&O) managing director Tay Kheng Chiong believes the company can achieve a 26% jump in net profit to RM50 million in the current financial year, even though it had its weakest quarterly profit in 10 years in the first quarter.

He told The Edge after the company’s annual general meeting on Wednesday that he expects to achieve the profits on between 5% and 10% higher revenue.

Tay explained that his bullishness stems from rising LED use, especially in electric vehicles (EVs), despite the flat global car market. Older petrol cars used under 100 LEDs, but new EVs like the Huawei Aito M9 can use up to 980 LEDs per vehicle.

Later in the day, however, the company announced that its net profit for the first quarter ended March 31, 2025, dropped 96.8% compared to last year, mainly because lower production use hurt profit margins.

For the quarter ending March 31, 2025, D&O Green Technologies’ net profit dropped sharply to RM356,000 from RM11.28 million a year earlier, the lowest since late 2014. Revenue also fell 12% to RM240.82 million, and gross profit margin dropped from 21% to 15.8%. No dividend was paid.

In its filing with Bursa Malaysia, the company said the weak results were due to seasonal slowdowns in the car industry and a nationwide effort to reduce excess inventory during uncertain economic times. Challenges included old stock, slower electric vehicle sales and unstable prices which forced dealers to adjust their stock and pricing.

Despite this, the company expects the slowdown to be temporary. D&O said in its filing that it is managing current economic challenges by cutting costs, spending carefully and improving its supply chain through better buying, supplier deals and reducing waste.

The company expects sales to pick up in the third quarter of 2025 as orders grow and car industry inventories return to normal. This momentum should continue into the fourth quarter, helped by new product designs and seasonal demand.

Tay, when met after the company’s AGM, said the company is cutting spending to RM40–50 million this year to boost cash reserves by RM75 million as a buffer against market uncertainty. This is down from RM130.6 million in capital spending in FY2024.

Tay explained that Chinese EV makers like BYD are cutting prices to clear old stock, while many buyers are waiting for next-gen EVs with a 1,000km range, expected next year. He believes EV sales will rise once that milestone is reached.

Sales in China remain strong, contributing 45%–50% of revenue, with more customers expected in 2026–2027.

D&O's financials remain healthy, with RM483 million in borrowings, RM194 million in cash, and a net gearing ratio of 0.3. The company will continue paying dividends, having paid three sen per share in FY2024.

Tay added that semiconductor tariffs haven’t impacted the business so far, and the Americas account for just 7.2% of its RM1.07 billion revenue. He expects global tariffs to stabilise around 10%, which the company can manage.

Shares of D&O closed two sen or 1.53% lower at RM1.29 on Wednesday, valuing the company at RM1.62 billion. The counter has declined over 38% year-to-date.