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Best World's net profit falls 23.7% in Q2
BEST World International posted a net profit of S$9.13 million for the second quarter ended June 30, down 23.7 per cent compared to a year ago.
Revenue fell 36.6 per cent to S$35 million, due to a plunge in performance in its China market as it seeks to transition towards the franchise business segment, resulting in delayed revenue recognition.
Earnings per share stood at 1.66 cents, down from 2.17 cents previously.
A dividend of 1.2 Singapore cents was declared for the quarter.
In a filing to the bourse, the group said that the management is still "cautiously optimistic" that the group will be able to register bottom line growth for FY2018, despite having recorded lower revenue during the transition phase in 1H2018.
However, it listed some factors that may affect its performance.
In 2H2018, Best World expects higher professional fees and other related expenses than in 1H2018, as it explores M&A and corporate development opportunities.
There will be higher administrative expenses for FY2018 compared to a year ago, due to an increase in management and staff in the headquarters and certain subsidiaries, depreciation expenses related to the group's Tuas facility, its related equipment and the establishment of its Changsha branch office.
The management maintains its cautious optimistic outlook that revenue from Taiwan will be stable when compared to FY2017, primarily driven by events, campaigns and product launches in 2H2018.
Upon conversion to the franchise segment in China, it expects an increase in revenue, gross profit and gross margin due to higher revenue recognised as franchise price is significantly higher than export price, among others.
However, the group said that the revenue from the franchise segment in 3Q2018 will not fully represent the financial performance of its China business for the entire quarter.
Fluctuating currencies of key markets which the group operates in may positively or negatively impact the group's performance, it said.