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Thursday, May 24, 2018

Lii Hen 1Q net profit slumps on higher costs, unfavourable forex rates

Tan Xue Ying / theedgemarkets.com
May 24, 2018 19:46 pm +08

KUALA LUMPUR (May 24): Higher costs and unfavourable foreign exchange rates dragged Lii Hen Industries Bhd’s quarterly net profit down by 63%, the furniture maker said as it revealed its fianancial results for the first quarter ended March 31, 2018 (1QFY18).

In a bourse filing today, the group said its 1QFY18 net profit came in at RM8.13 million, compared with RM22.12 million in 1QFY17, despite a 12% year-on-year rise in revenue to RM193.76 million, from RM173.02 million, as sales of its products grew at a steady pace.

Earnings per share fell to 4.52 sen, from 12.29 sen in the year-ago quarter. Lii Hen declared a first single tier dividend of 2.5 sen per share, payable on June 29.

“The increase [in revenue] was offset by the continued depreciation of US dollar against ringgit by 12%, compared to the corresponding quarter of last year. Profit before tax decreased mainly due to the higher raw materials cost, higher labour operating costs resultant from more hiring, as well as more overtime claimed and extra overhead cost on foreign workers levy,” Lii Hen said.

On prospects, the acceleration of production costs and shortages of workforce will continue to affect the group’s financial performance, but Lii Hen said it is committed to remain profitable for the year.

The recent weakening of the US dollar will also affect its operating results, financial performance and liquidity, the group added.

In view of these setbacks, Lii Hen said it will continue to focus on core products by diversifying its product range to strengthen its market position and expand its customer base, while adopting an effective cost management strategy.

Shares of Lii Hen fell five sen or 1.85% to close at RM2.65 today, giving it at a market capitalisation of RM480.6 million. Its share price has declined 26% to date, from RM3.58 on Dec 29, 2017.

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