Friday 29 Mar 2024
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KUALA LUMPUR (Sept 26): Furniture maker Poh Huat Resources Holdings Bhd recorded a 4.72% decline in net profit for its third financial quarter ended July 31, 2018 (3QFY18) to RM9.2 million from RM9.66 million a year ago, as its Vietnamese operations faced stiffer competition and lower sales.

Despite higher contribution from its Malaysian operations, the group’s overall revenue declined 4.28% to RM145 million in 3QFY18 from RM151.48 million in 3QFY17, it said in a stock exchange filing today.

“Our product mix in Vietnam has, over recent quarters, shifted to the more affordable ranges resulting in lower sales value. Our operations (there) also faced stiffer competition from (local) manufacturers as more Chinese-owned manufacturers shifted their production facilities from Southern China to Vietnam,” Poh Huat said.

In Malaysia, Poh Huat had continued to receive strong orders for its panel-based bedroom states for the US market, as well as sustained orders for its office furniture. Gross margins for the segment, however, declined to 18.6% in the quarter versus 24.6% a year ago as raw material costs rose.

For the cumulative nine months ended July 31, 2018 (9MFY18), the group’s net profit fell 30.7% year-on-year to RM26.28 million, while revenue for the period slipped 2.3% to RM432.42 million from RM442.58 million a year ago.

“While we continue to enjoy sustained orders from our customers, we have noticed a shift in our product mix to the more affordable ranges. A prolonged slowdown on household formation, especially amongst the young, may have adverse impact on the demand and pricing for our products,” Poh Huat said.

The group said it would continue to be alert to the acceleration of raw material and labour costs, as well as volatility of the US dollar against the Ringgit which may have adversely impact its financial performance. 

“Like before, we will continue to adjust our products offerings to cater for the changes in demographics and market trends. We will also have to work closely with our customers to mitigate increases in raw material prices, labour costs and pricing adjustments,” it said.  

Meanwhile, the US-China trade war may have potentially positive implications for the group as tariffs, if imposed on China-sourced furniture, would make Poh Huat’s products more competitive against those made in China. 

Poh Huat shares closed unchanged at RM1.43 today, giving it a market capitalisation of RM333.52 million.


 

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