Management Discussion and Analysis | Karmarts Public Company Limited

Operating Results for the year ending December 31, 2024

During 2024, the Company’s total revenues amounted to Baht 3,204 million which consisted of:

Baht 3,148 million from Sales, reflecting an increase of Baht 751 million or 31.33% from the previous year. This comprised of Baht 471 million from body care products, Baht 766 million from facial skin care products, Baht 1,737 million from cosmetics, Baht 33 million from accessories, Baht 131 million from furniture, marketing tools and others, and Baht 10 million from supplementary.
Income from warehouse rental and warehouse services amounted to Baht 26 million, unchanged from the last year.
Other income totaled Baht 30 million, reflecting an increase of Baht 6 million or 25% compared to the previous year. This growth was primarily driven by various factors, including the income from management and rental to joint ventures of Baht 5.62 million, dividends received totaling Baht 4.48 million, a decrease from the allowance for diminution in investment value of Baht (3.56) million, and a foreign exchange loss of Baht (0.50) million.
The Gain from the sales of investments in equity instruments at fair value stood at Baht 19.34 million, marking a significant increase of Baht 11.69 million or 152.81%
The Gain on the change in fair value of investment properties amounted to Baht 39.57 million, indicating an increase from the previous year’s figure of Baht 34.43 million. This gain was attributed to the Company and its subsidiaries entering into new lease agreements and assessing property values using the income and market comparison approaches Baht 39.57 million.
Finance income increased to Baht 28.73 million Baht 21.24 million from the previous year. This increase can be attributed to the Company’s heightened cash reserves resulting from capital increases, leading to higher interest income.

2. Cost of sales, Selling and Administrative Expenses

During the year 2024, The Total Expenses was Baht 2,334 million, which comprised:

Cost of sales amounted to Baht 1,463 million, reflecting an increase of Baht 314 million or 27.32% from the previous year. The cost of sales is directly proportional to the sales revenue. The gross profit margin was 53.51%, similar to the previous year.
Cost of warehouse rentals and warehouse services amounted Baht 0.07 million.
Selling and administrative expenses totaled of Baht 870 million. Reflecting an increase of Baht 239 million or 37.87% from the previous year. This increase was primarily driven by an increase in selling expenses increased by Baht 189 million in response to the market conditions. Overall increase due to an increase in sales promotion expenses of Baht 33.52 million, an increase in advertising expenses of Baht 106.45 million, an increase in employee expenses of Baht 31.62 million, and an increase in other expenses of Baht 17.55 million. The administration expenses increased by Baht 50 million, primarily due to an increase in contractual expenses of Baht 6.41 million, an increase in employee expenses of Baht 30.38 million, and an increase in other expenses of Baht 13.73 million.
Loss on the change in fair value of investments in equity and derivative instruments amounted Baht 78 million, representing a decrease of Baht 163 million from the previous year.
The Company’s share of loss from investments in joint ventures and associates amounted to Baht 6.49 million, reflecting a decrease Baht 56.81 million from the previous year’s. This was due to improved performance in joint ventures and associates in 2023, along with gains from changes in the fair value of investment properties
The company’s finance costs, including the interest expenses, totaled of Baht 19 million, reflecting an increase of Baht 3 million from the previous year.
Income tax expenses amounted to Baht 172 million, repenting an increase from the previous year by Baht 27 million or 18.62%, attributable to the Company’s improved operating results.

During the year 2024, the Company recorded a net profit from the Company’s equity holders of Baht 678 million, or 21.53% of sales. Reflecting an increase of Baht 17 million or 2.57% from the previous year by. In 2024, the Company’s sale increased by Baht 751 million, while the selling expenses rose by Baht 189 million, and administrative expenses increased by Baht 50 million from the previous year. Loss on the change in fair value of investments in equity instruments stood at Baht 78 million, gain on the sale of investment amounted to Baht 19 million, gain on change in fair value of investment properties was recorded Baht 40 million, and share of loss from investments in joint ventures Baht 6.49 million. Finance income totaled Baht 29 million, Finance costs increased by Baht 3 million, reaching from the last year, reaching a total of Baht 19 million.

4. Rate of Return on Equity

The company’s profit from operations in 2024 resulted in return on equity (ROE) of 20.33%, compared to 29.10% during the year 2024 in the previous year. Despite this decline, the Company experienced an increase in profit from operating activities during the year.

Financial Status as at December 31, 2024.

1. Assets

1.1 Composition of Assets

The total assets at the year-end 2024 amounted to Baht 4,723 million, reflecting an increase year by Baht 473 million, or 11.12% from the previous.

1.1.1 Current assets amounted to Baht 3,082 million, increased by Baht 230 million or 8.06% from the previous year. The details are as follows;

Cash and cash equivalents totaled Baht 558 million, reflecting a decreased by Baht 284 million from the previous year. This was due to Net cash from operating activities Baht 437 million, net cash used in investing activities Baht 429 million and net cash used in financing activities Baht 292 million.
Trade accounts receivable and other account receivable totaled at Baht 622 million. Reflecting an increase by Baht 105 million or 20.30% from the previous year. Driven by the Company's increased sales.
The current portion of finance lease receivables and finance lease receivables – net of current portion. Totaled Baht 4 million, reflecting a decrease of Baht 3 million, or 42.85% from the previous year. This decline was due to the company continues to receive payments.
Short – term loans to a related party of Baht 49 million, reflecting an increase Baht 30 million or 157.89% from the previous year.
Inventory of Baht 840 million which comprises consumer products and raw materials. Reflecting an increase by Baht 259 million or 44.57% from the previous year.
Real estate development for sale Baht 10.95 million, reflecting an increase of Baht 10.95 million, or 100% from the last year.
Other current financial assets totaled Baht 892 million, Reflecting an increase of Baht 78 million or 9.58% from the previous year.
Other current assets totaled Baht 107 million, Reflecting an increase of Baht 32 million or 42.67% from the previous year.

1.1.2 Non-current asset amounted to Baht 1,641 million. Reflecting an increase of Baht 243 million or 17.38% from the previous year as follows:

1.2 Quality of Assets

In 2024 trade and other receivables totaled Baht 622 million, accounting for 13.16% of total assets. The average collection period for accounts receivable was 66 days, a decrease of 6 days from the previous year (72 days in 2023). This change was due to a decline in cash sales for consumer goods, with a corresponding increase in credit sales through traditional trade channels, which have payment terms ranging from 30 to 120 days.

An adequate reserve was set Based on the projected non-collectible debt. The reserve for non-collectible debt in 2024 was budgeted at 1.05% of the outstanding accounts receivable at the year-end.

Inventories totaled Baht 840 million or 17.78% of total assets. The average inventory turnover of 118 days, an increase of 17 days from the previous year (101 days in 2023).

Investment properties totaled Baht 516 million or accounting for 10.92% of total assets. Their valuation was conducted by an accredited independent valuer using the income approach and market approach for land. Key assumptions used in the valuation include the discount rate, yield rate, and long-term rental growth rate.

Cash and equivalents totaled Baht 558 million, accounting for 11.81% of total assets.

2. Liquidity

2.1 Cash flows

In 2024, the Company’s net cash flows cash and cash equivalents totaled Baht 558 million. Compared to Baht 842 million in 2023, reflecting a decrease of Baht 284 million. Net cash from operating activities amounted to Baht 437 million, while net cash used in investing activities totaled Baht 429 million. This was primarily due to the Company’s purchase of land, equipment, and intangible assets, as well as the acquisition of investments in a joint venture, fixed deposits, and equity instruments. Net cash used in financing activities amounted to Baht 292 million, mainly due to dividend payments and short-term loans to a related party.

2.2 Liquidity Ratios

The current ratio (current assets/current liabilities) in 2024 was 2.70:1. The Company's current assets can be easily converted into cash within a short period, including cash and cash equivalents 11.81%, accounts receivable 13.16%, and inventories 17.78% of total assets.

The Company's average debt collection period was 66 days. The average inventory turnover was 118 days, the same as the previous year. This stability is attributed to the higher turnover of Karmarts' products.

2.3 Collection and Payment Periods

The average debt collection period was 66 days, while the average accounts payable period was 155 days. This is because the Company currently selects the payment option of issuing a letter of credit through commercial banks, extending the credit term to approximately 120–180 days through the bank’s granted Trust Receipt facility.

3. Investment Expenditure

During the year, The Company's capital expenditures were primarily related to assets under installation, including land, buildings, building improvements, and motor vehicles totaling Baht 227 million to support business growth.

4. Sources of funds

4.1 Capital Structure

In 2024, debt to equity ratio was 0.36:1. The company had total liabilities Baht 1,226 million increased from the previous year Baht 281 million or 29.73%. Equity attributable to owners of the Company totaled Baht 3,430 million, an increase of Baht 190 million or 5.86% from the previous year. Due to the issuance of additional common shares.

4.2 Shareholders’ Equity

In 2024, shareholders’ equity increased by Baht 190 million, reaching Baht 3,240 million. This increase was driven by an operating profit of Baht 678 million during the year, offset by a dividend payment of Baht 488 million.

4.3 Liabilities

The Company’s total liabilities totaled Baht 1,226 million, Reflecting an increase of Baht 281 million or 29.73% from the previous year.

Current Liabilities totaled Baht 1,144 million Reflecting an increase of Baht 317 million or 38.33% from the previous year. The Details are as follows:

Short-term loan from financial institutions totaled Baht 610 million, Reflecting an increase of Baht 237 million due to the Company's promissory notes, which rose by Baht 396 million from the previous year at an interest rate of 2.65%–2.95%. Meanwhile, short-term loans from financial institutions decreased by Baht 160 million from the previous year, with an interest rate of 3.25% - 4.05%.
Trade and other payables of Baht 368 million, increased by Baht 59 million.
Short-term loans from related party amounted to Baht 12 million, reflecting a decrease of Baht 4 million or 25% from the previous year. Due to the Company's continuous repayments
The current portion of liabilities under financial lease agreements due within one year, along with liabilities under financial lease agreements (net of the current portion), totaled Baht 19 million, reflecting a decrease of Baht 38 million or 66.66% due to a reclassification related to building assets.
Income Tax Payable totaled Baht 86 million, reflecting an increase of Baht 18 million from the previous year, due to the Company’s increase in net profit.
Other Current Liabilities totaled Baht 53 million reflecting an increase from the previous year of Baht 11 million or 26.19%.

Non-current liabilities totaled Baht 82 million, reflecting an increase by Baht 36 million or 30.50% from the previous year, The Details are as follows:

A provision of Baht 29 million was made for long-term employee benefits, flecting an increase of Baht 6 million from the previous year. This increase was due to employee benefits assessed by an actuary in accordance with TAS 19
Deferred Tax Liabilities totaled Baht 48 million, "Reflecting a decrease of Baht 9 million or 15.78%. This decline was due to a Baht 8 million reduction from the surplus in the fair value of investment properties.

5. Factors and main influences which has significant impact on company’s operations or its financial status in the future

The Executive Committee establishes an annual business plan and strategic actions to achieve its yearly goals. These measures ensure that the Company can adapt its management approach flexibly. To address significant factors that may impact its operations, as outlined below.

Main Factors

Sufficient procurement of products and changes in product trend and fashion
Human Resources Development
The Price of products and Wages
Financial Assistant to Associated or Subsidiary companies and Contingent Liabilities in the future.

Action Plan

The Company is capable of product adjustment to cope with the changing trend of product popularity and its procurement system can manage inventory level to service the changing demand and changing trend and fashion.
The Company supports Human Resources Development by providing adequate both internal and external training to increase employee skills and proficiency.
The Company has a procurement and purchasing units that source raw materials and finished products from high-quality suppliers at competitive prices in a market with high volatility. Additionally, it contracts services tailored to the organization to achieve low selling costs while maintaining high product quality.
In case of rendering financial assistant to the Associated or Subsidiary company, the Company completely and transparently follows the rules and regulations of SET and able to be audited. The independent directors are to review and monitor the Company’s operations closely, for the most benefit of investors and stakeholders.