KUALA LUMPUR (Aug 23): Furniture maker Lii Hen Industries Bhd posted a 22.44% drop in net profit to RM12.89 million in the second quarter ended June 30, 2018 (2QFY18) from RM16.62 million a year ago due to a stronger ringgit and acceleration of operating costs, especially the additional levy on foreign workers.

Earnings per share slipped to 7.16 sen, against 9.23 sen in 2QFY17.

However, revenue rose 12.26% year-on-year to RM190.41 million, against RM169.61 million.

The group declared a second single tier dividend of 3.5 sen per share amounting to RM6.3 million for the financial year ending Dec 31, 2018, payable on Sept 27.

Exports accounted for 92.61% of total revenue in 2QFY18, while the remaining was from local sales, according to the company's filing to the stock exchange.

For the cumulative six months, Lii Hen's net profit was 45.73% lower at RM21.03 million or 11.68 sen per share, versus RM38.74 million or 21.52 sen per share in the previous year, while revenue increased 12.12% to RM384.17 million from RM342.63 million a year ago.

Although the board of directors is generally positive about US consumer sentiments owing to the robust US economy, its tariff trade war with China has led to uncertainties on the global front.

"While we still continue to receive strong orders from customers, the main challenge that the group faces is at the local front where the acceleration of production costs and shortages of workforce will continue to affect the group's financial performance," said Lii Hen.

It said management would continue to focus on the group's core products, but also diversify its product range and expand the customer base, and continue with its cost management strategy.

With a better controllable cost structure and wider market base, the board is cautiously optimistic the group will remain profitable for the current financial year.

Lii Hen closed 10 sen or 3.34% lower to RM2.89 today, valuing the company at RM520.2 million.