ECS ICT sees lower 2Q earnings as sales fall

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KUALA LUMPUR (Aug 8): ECS ICT Bhd announced a 15% year-on-year decline in net profit to RM4.27 million in its second quarter ended June 30, 2018 (2QFY18), from RM5.01 million previously, as revenue fell 19% to RM358.21 million from RM443.47 million.

The group attributed the lower sales and earnings to cautious consumer spending prior to the 14th general election, and the transitional period of the goods and services tax (GST) from 6% to 0%.

These hit its ICT distribution business segment, which recorded a 27% fall in the sales of notebook and mobility products such as tablets and smartphones, its stock exchange filing today showed.

Though its two other segments, enterprise systems and ICT services, registered higher sales during the quarter under review, it was not enough to offset the weaker performance in its ICT distribution business.

For the first half ended June 30 (1HFY18), ECS ICT's net profit retreated 12% y-o-y to RM8.66 million from RM9.83 million registered earlier, as cumulative revenue slumped 17% to RM750.01 million from RM900.26 million.

ECS ICT’s chief executive officer Soong Jan Hsung said the group’s outlook for 2HFY18 remains challenging, especially with the still-cautious ICT spending in both the consumer and commercial sectors.

“Public sectors and government-linked companies’ projects were deferred, hence we shall continue to grow our private sector revenue to cover the shortfall of business from the public sector.

“We expect improvement in 4Q with higher sales of consumer ICT products and corporate spending on ICT equipment from the private sector’s year-end budget,” Soong said in a media statement.

The group also plans to include in its list of consumer ICT products, more gaming-related products and peripherals in 2HFY18 to boost sales, as it has observed good progress on the sale of gaming netbooks, in tandem with the rising e-sports market trend in Malaysia.

Shares of ECS ICT closed unchanged at RM1.01 today, for a market capitalisation of RM181.80 million.