K-Star narrows 3Q loss by 83% on year to RM5.5m

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KUALA LUMPUR: K-Star Sports Ltd has narrowed its net loss by 83% to RM5.5 million in the third quarter of financial year 2014 ended Sept 30 (3QFY14), from RM32.9 million in the previous corresponding quarter.

The smaller loss came on a “stable” overall gross profit margin, as its average selling price and production costs saw no major fluctuation, said the sports footwear firm in a filing with Bursa Malaysia yesterday.

Revenue rose 7.7% to RM43.3 million from RM40.2 million a year earlier.

K-Star said sales of Dixing brand footwear has improved, but sales of original equipment manufacturer products and apparel have deteriorated.

For the nine-month period of FY14 (9MFY14), net loss narrowed 58% to RM15.3 million from RM36.6 million a year ago, while revenue fell 8.6% to RM121.9 million from RM133.5 million in the same period last year. K-Star said its gross profit margin declined 2.72% in the reviewed period to 7.69% from 10.41% in 9MFY13, mainly due to higher fixed manufacturing overhead costs per unit, while cost of raw materials and labour remained high.

However, the firm saw a significant reduction in sales and distribution expenses, mainly due to a consensus reached with distributors to terminate sales rebates, it said. The sales of sports footwear and sports apparel were lower by 5.43% and 60.23% respectively, it noted.

On prospects for the current financial year, K-Star is optimistic on the long-term potential and sustainability of the sports industry in China. But it remains cautious on the uncertainty of the economic recovery, as it sees competition will continue to intensify within China’s sporting goods industry.

 

This article first appeared in The Edge Financial Daily, on November 14, 2014.