Poh Huat Q3 earnings down marginally on higher expenses

PETALING JAYA: Poh Huat Resources Holdings Bhd's net profit for the third quarter ended July 30, 2017 fell 3.4% to RM9.66 million from RM9.99 million a year ago, due to higher selling, distribution and administrative expenses and foreign exchange losses of RM80,000 in the current quarter.
Its revenue rose 21% to RM151.48 million compared with RM125.65 million recorded in the previous year corresponding quarter, attributable to higher shipping volume for both its Malaysian and Vietnamese operations.
For the nine months period, net profit jumped 35.4% to RM37.93 million from RM28.01 million a year ago, while revenue increased 15.5% to RM442.58 million compared with RM383.17 million in the previous year's corresponding period.
Poh Huat declared a second interim single-tier dividend of 2 sen per ordinary share in respect of the current financial period ending July 31, 2017, payable on Nov 30, 2017 to depositors. It also declared a special interim single-tier dividend of 1 sen per ordinary share in respect of the financial year ending Oct 31, 2017, payable on Jan 15, 2018 to depositors. Total dividend declared for the current financial year-to-date was 5 sen per ordinary share.
Poh Huat said in line with the sustained demand for furniture in the US market, the group's operations continued to enjoy strong orders from customers from the US for both the office and home segment.
In particular, shipment of its new ranges of panel based home products from its Malaysian operations to the US has rammed up over the last nine months as its efficiency improves.
In Vietnam, it also commenced shipment of several newer ranges of bedroom sets, for which production runs is expected to smoothen over the next few months.
"Overall the group expects this trend to continue for the remaining financial year.While the demand for our product continued to be strong, we face challenges both in our operations and in the marketplace. We have always experienced escalating raw material and labour costs to global inflationary pressure. While we strive for higher manufacturing efficiency, we have limited ability to control or influence on external supply and costs pressure and to keep our operating costs low," said Poh Huat.
Competition in the marketplace has also turned keener as consumers demand for trendier and more competitively priced items. The group has experienced downward pricing pressure on its products due to competition from other manufacturers. Furniture also has to cater for changing demographics particularly for millennials and younger families who have lower spending power and whom are more comfortable with online purchases and ready-to-assemble products.
"We have aligned ourselves to respond to these changes by working closely with our customers to develop trendier, market oriented products for the marketplace."
Poh Huat closed 3.7% higher at RM1.96, with 547,200 shares done. It has a market capitalisation of RM419.3 million.