Hai-O’s Q4 net profit slips 7.6% from MCO impact

29 Jun 2020 / 17:15 H.

PETALING JAYA: Hai-O Enterprise Bhd net profits slipped 7.6% to RM9.57 million in its fourth quarter ended April 30, 2020 from RM10.35 million reported in the corresponding quarter of the previous year due to impact from the implementation of the movement control order (MCO) to the group’s business activities.

Revenue for the period fell 23.3% to RM53.69 million from RM70 million reported previously.

According to the group’s Bursa filing, its multi level marketing division’s pre-tax profits for the quarter fell by a marginal 1.5% to RM10.2 million thanks to a higher sales of ‘small ticket’ items during from its e-commerce platform during the MCO period, cost optimisation initiatives, as well as higher advertising & promotion subsidy from suppliers.

Its wholesale division saw pre-tax profits decline by 54.4% to RM900,000 from lower revenue and an estimated credit loss of RM1.1 million as required under MFRS 16 coupled with lower contribution from inter-segment sales.

Meanwhile, Hai-O’s retail division was hit hardest by the MCO, as it reported a pre-tax loss of RM900,000 compared to a pre-tax profit of RM400,000 registered previously.

Its other division posted a pre-tax profits decline of 26.1% to RM3.1 million dragged by lower manufacturing contribution, RM500,000 compensation paid of a sealed judgment arising from an alleged early termination of a tenancy agreement for one of the investment properties.

For FY20, its net profits for the year stood at RM32.23 million, a 32.5% decline from RM47.74 million recorded in the previous financial year.

Revenue for the period fell 22.3% to RM255.16 million from RM328.41 million reported previously.

For the full financial year, the group has recommended a final single tier dividend of 4 sen subject to the approval of its shareholders in the upcoming annual general meeting.

In regards to its prospects ahead, the group stated the unprecedented challenges faced by businesses and individuals during this unexpected and extended health and economic crisis will inevitably have a prolonged impact on consumer sentiment in the midst of rising unemployment.

“Amidst the challenges, the group has delivered resilience in the latest quarter under review as operating profit was maintained despite an almost 20% decline in revenue from the immediate preceding quarter,” it told bursa.

Although the outlook remains highly uncertain in light of the new norm, Hai-O stated that it is optimistic over its ability to face and adapt to sudden and unexpected changes, which will place it in good stead to ride challenges ahead.

Moving forward, the group said it will continue to optimise costs, re-strategise business plans, and work to further strengthen our existing digital infrastructure, enhance our presence in social media and digital advertising to reach out to existing and potential customers.

It stated that with the Covid-19 pandemic it hopes fortify its position as a premier healthcare company in Malaysia.

With that, the board expects Hai-O to remain profitable amidst the challenging business environment in the next financial year.

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