Amidst the economic slowdown, RMA (Cambodia) Plc (RMAC) faced a substantial decline in business performance during the fourth quarter of 2023.

RMAC, an automotive, heavy equipment, engineering and food services conglomerate with a corporate bond listed on the Cambodia Securities Exchange (CSX), reported in its February 19 filing that its revenue for Q4 2023 was 315 billion riel ($77.44 million), a 53% decrease compared to Q4 2022. 

Profits for the quarter showed a loss of 13.1 billion riel ($3.221 million), a decrease of 120.8% year-on-year.

The company’s total assets at the end of Q4 were 1.094 trillion riel ($268.9 million), an increase of 23% compared to 889.3 billion riel ($216.7 million) at the end of 2022. 

Total liabilities at the end of 2023 stood at 586.6 billion riel ($144.1 million), 30% higher than 2022’s 451.4 billion riel ($110.9 million).

Kevin Whitcraft, chairman of RMAC, stated in the filing that the global economy showed more resilience than expected in Q4 2023. 

According to Euromonitor International, an independent provider of market research, there was a slight increase in the world’s GDP to 2.8% from 2.6% in Q4 2023. However, Whitcraft noted that China, Asia’s largest economy and traditionally the largest investor in Cambodia, had a deteriorating outlook with its full 2023 GDP growth lowered to 5.0%. 

“The substantial real estate sector crisis, coupled with lackluster manufacturing orders, has shaken Chinese consumer confidence. On the bright side, economists see strong growth in the emerging economies of the Asia Pacific region, [including] Vietnam, the Philippines, Indonesia and India. Cambodia is set to benefit from its neighbour’s economic vitality,” he stated. 

“Prime Minister Hun Manet announced the new government’s strategic blueprint for the transformation of Cambodia’s economy at the 19th Government-Private Sector Forum in November. The dynamism of this and other initiatives are anticipated to bear fruit in 2024,” he added.

Whitcraft explained that in the fourth quarter of 2023, the Cambodian automobile market saw a sharp contraction of 36% in units sold compared to the same quarter in 2022. 

“This came after an even deeper dip in the third quarter, down 46% compared to the same quarter in 2022. A reduction in approval rates for consumer bank loans and high interest rates impacted local spending. Hopes for a more rapid growth in tourism post-Covid did not materialise in 2023,” he stated.

“RMAC is proud that in 2023 the majority of vehicles sold were manufactured in Cambodia. Additionally, our agricultural equipment division distributing John Deere products reclaimed market share and profitability in the second half of the year, and our distribution of the Changan brand started to show results,” he added.

Whitcraft stated that over the course of Q4 2023, the company recorded lower sales by 53% compared to the same period of 2022, which saw an historical peak. Nevertheless, he noted, the company retains its market leadership year-to-date in the non-luxury automotive segment with the Ford and Changan brands.

He said that with increasing costs and higher interest rates, expenses rose significantly compared to the same period of 2022. However, Whitcraft noted that the company still achieved a net profit after tax of 113 billion riel ($27.78 million) for the year.

“RMAC remains committed to providing its customers with highly sought-after, iconic products and unmatched services. The revenue of our After-Sales service division has grown by 14% over the full year, reflecting our customers’ appreciation for the quality and efficiency of our services. We continually invest in expanding our after-sale service centre network,” he added.

In a previous filing, the company noted that the Cambodian car market grew by 26% in 2022 compared to the previous year. Approximately 71,000 new and used vehicles were sold, up from 57,000 units in 2021.

New car sales rose to over 28,000 units in 2022, representing a 43% increase over 2021, accounting for 39% of the total market, up from 34% in 2021. In 2022, new Ford vehicle sales increased by 31%.

According to the “Cambodia Automotive and Electronics Sectors Development Roadmap”, compiled by the Council for the Development of Cambodia (CDC), automotive component exports surged more than threefold to $200 million in 2019, from $60 million in 2015. 

Electronics exports stood at $900 million in 2019 compared to $400 million in 2015, representing a compound annual growth rate (CAGR) of 20%.

“The target of the roadmap is to expand the exports of the automotive sector by around $500 million and of the electronics sector by around $1.6 billion, while generating around 10,000 new jobs in the automotive sector and around 16,000 new jobs in electronics by 2027,” the report stated.