Thursday 28 Mar 2024
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KUALA LUMPUR (May 3): PRG Holdings Bhd's 63%-owned Hong Kong Stock Exchange (HKEX)-listed subsidiary Furniweb Holdings Ltd has issued another earnings warning, this time saying it may be reporting losses.

In a Bursa Malaysia filing, PRG said based on the preliminary review of the audited consolidated management accounts of Furniweb, the company is expected to record a net loss of approximately RM1.2 million for the three months ended March 31, 2019 (1QFY19).

This is compared with the net profit of some RM200,000 in the same quarter a year ago.

It attributed the net loss to decrease in sales order of higher profit margin products from several major customers, which made fixed overheads of the products not fully covered by revenue.

Furniweb also saw an increase in cost of sales, mainly in raw material costs of crude oil-based yarn, chemicals and dye stuff which had not been passed on to customers, as well as direct labour costs.

Additionally, the company said its administrative expenses were higher during the quarter, due to pre-opening expenses incurred for a retail entity, professional fees for the proposed acquisition of Meinaide Holdings Group Ltd — which is involved in the PVC foam board business — and an increase in staff costs.

“Shareholders and potential investors are advised to exercise caution when dealing in the shares of the company,” PRG said.

Last October, PRG warned that Furniweb could see its net profit for the first nine months of its financial year ending Dec 31, 2018 (9MFY18) reduced by 86.5% year-on-year.

According to audited figures released on the HKEX website for the full year ended Dec 31, 2018 (FY18), Furniweb’s net profit plunged 89% to RM926,000, from RM8.57 million in FY17, while revenue fell 15.7% to RM92.57 million, from RM109.75 million in FY17.  

The lower earnings were due mainly to higher material prices, a higher proportion of relatively lower margin products sold, decrease in sales volume, and the weaker US dollar against the ringgit, the website showed.

At the time of writing, shares of Furniweb were last traded HK$0.02 or 0.69% lower at HK$2.88, valuing the stock at HK$1.45 billion. Back home, PRG shares closed unchanged at 72 sen, for a market capitalisation of RM233.42 million.

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