KUALA LUMPUR (Sept 25): Hai-O Enterprise Bhd sees a challenging year ahead for the company, due to uncertainties of new policies from the new government, as well as the US-China trade war.

Speaking to reporters in a press conference after its annual general meeting, alongside with its group managing director Tan Keng Kang, Hai-O's group chief financial officer Hew Von Kin elaborated that these uncertainties have lowered consumer sentiment which resulted in lower demand.

Nevertheless, Hai-O is cautiously optimistic about the company's outlook, as the company's key focuses are to expand its product offerings, go digital via its e-commerce platforms, as well as to increase its cost efficiency, Hew explained.

"We are hoping to do better than last financial year, despite all these uncertainties" Hew said when asked about its earnings outlook for financial year ended April 30, 2019 (FY19).

Hai-O's net profit for the full year (FY18) grew 26% to RM74.83 million, from RM59.48 million last year, as revenue grew 14% y-o-y to RM461.78, from RM404.24 million.

This was despite seeing its net profit fall 12% in the fourth quarter ended April 30, 2018 (4QFY18) to RM16.27 million, from RM18.46 million, on the back of lower revenue.

Quarterly revenue was down 7% to RM110.65 million versus RM118.62 million a year ago, as its MLM division's contribution declined by some 17%, which was negatively impacted by the slow-down of business activities prior to the 14th general election, as members turned cautious due to uncertainties ahead of it.

Additionally, on the implementation of the sales and services tax (SST), Hew said Hai-O has yet to determine the impact of this new tax regime. However, the company is currently negotiating with its suppliers about absorbing some of the SST, as the market has been weak at the moment, he added.

For FY19, the group has allocated about RM3 million of capital expenditure for upgrading of its retail outlets.

At noon break, shares of Hai-O were down five sen or 1.21% at RM4.07, for a market capitalisation of RM1.19 billion.