Crane builder Yongmao expects 'significantly' lower net profit on lower revenue in China

MAINBOARD-LISTED crane manufacturer Yongmao Holdings on Monday guided for a "significantly lower" net profit for the second half of the financial year ended March 31, 2020 (FY2020), compared with the same period last year. 

The decline in net profit is due to lower revenue in China, in light of the national lockdown to combat the Covid-19 pandemic in the first few months of 2020, the China-based firm said in a profit-guidance note.

In addition, due to the consolidation of Beijing Yongmao's plant with Fushun, the group recorded a one-off obsolescence stocks adjustment and write-off, as well as higher cost of goods sold in the second half of FY2020 to adjust for an undercharge of goods sold in the first half.

Amid the virus outbreak, strict government containment measures were first implemented in China, where the firm's major production plants operate. These measures were subsequently extended globally, in many instances resulting in full or partial national lockdowns, said Yongmao. 

The effect of these measures meant that the business operations of Yongmao's customers and freight forwarders were inadvertently disrupted, resulting in delays and/or postponement of deliveries of products, said the firm. 

Production in its plants in China resumed operation on Feb 10, but have not been operating at optimal capacity due to new health and safety measures at its manufacturing facilities, said Yongmao. 

The firm is finalising its financial results for FY2020 and will disclose further details of its FY2020 financial performance before July 29, 2020. 

Shares of Yongmao closed flat at S$0.93 on Monday.