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Higher expenses drag down GP Batteries' Q3 profit
MAINBOARD-LISTED GP Batteries International on Tuesday posted third quarter net profit that was down 83 per cent year on year to S$651,000 as at end December 2015, dragged down by higher finance costs, and distribution and administrative expenses.
Earnings per share for the quarter fell to 0.41 Singapore cent from 2.32 cents in the year-ago period.
Revenue for Q3 rose 1.9 per cent year on year to S$193.1 million.
The company said that as the Singapore dollar weakened significantly against the US dollar, the changes in turnover for the three months fell 7.1 per cent in greenback terms.
Sales of primary batteries rose 3.1 per cent for the quarter, while sales of rechargeable batteries slid 0.9 per cent.
"For the three months ended Dec 31, 2015, sales in Asia increased by 7.7 per cent while sales in the Americas decreased by 10.4 per cent as compared to the corresponding periods last year," GP Batteries said.
Gross profit margins for the quarter rose to 24 per cent, up from 22.5 per cent a year ago, due to lower material prices.
Finance costs rose 29.7 per cent year on year to S$1.7 million in Q3, mainly due to additional interest expenses incurred after the draw down of the S$85 million three-year term loan facility in July 2015.
Distribution expenses climbed 6.1 per cent to S$15.3 million, primarily due to the increase in turnover as well as an additional S$4 million doubtful debt provision made last quarter as a prudent measure against the weakening economy in China.
Administrative expenses rose 21.1 per cent to S$23.9 million due to an increase in staff cost, office rental and IT expenses.
GP Batteries said that net other operating income for the three months was S$2.2 million, down 59.2 per cent as there was a foreign exchange gain of S$3.7 million recorded last year, compared to a foreign exchange gain of S$1.1 million recorded this year.
Share of profits of associates for the three months came in at S$1.3 million, a reversal from the loss of S$1.2 million a year ago. This was attributable to improved performance of STL Group and AZ Limited, the group's 40 per cent-owned associate in Russia.
In its outlook, the group said that the market slowdown will continue to negatively impact sales especially in emerging markets.
"The primary battery market worldwide will continue to be slow growing and the group will place more emphasis on faster growing rechargeable batteries markets. The oversupply situation for the more mature product categories will become more apparent and very keen competition will continue," it said, adding that it will continue to focus on distribution development in target regions.