Hup Seng’s 4Q net profit falls 11.4% on higher costs

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KUALA LUMPUR (Feb 19): Hup Seng Industries Bhd’s net profit fell 11.4% to RM12.74 million for the fourth quarter ended Dec 31, 2018 versus RM14.38 million in the previous year as a result of higher cost of sales and poorer margins.

Earnings per share fell to 1.59 sen from 1.8 sen in 4QFY17. Revenue also fell slightly during the quarter to RM85.85 million from RM86.22 million a year ago.

The company declared an interim dividend of two sen per share for the financial year ending Dec 31, 2018, which was paid on January 8, 2019.

In a filing today, the biscuit manufacturer said profit before tax fell 9% during the quarter mainly due to poorer margin in a certain segment, though it noted there was higher incentive and promotional sponsorship activities given to the distributors during the current quarter.

It also noted that while domestic sales fell 2% during the quarter, export sales grew by 3% mainly in the China market.

For the full year, net profit also fell by 3% to RM42.96 million from RM44.45 million in the previous year, though revenue rose 3% to RM307.37 million from RM299.67 million a year ago.

The operating environment over the next six months is expected to experience weak domestic growth on the back of uncertain global and domestic economic prospects, and as consumers are expected to be more prudent with their spending.

“The group witnessed some margin compression arising from cost pressures amid continued growth in revenue. Nevertheless, [it] will continue its efforts to enhance operating efficiency to mitigate as much as possible the impact of higher input costs,” the group said.

Hup Seng closed up two sen or 1.92% to RM1.06, with a market capitalisation of RM848 million.