Creative Technology's Q2 net loss narrows to US$2.8m

Singapore

MAINBOARD-LISTED Creative Technology's net loss narrowed from US$4.92 million a year ago to US$2.8 million for the three months ended Dec 31.

The quarter under review saw other gains of US$0.6 million, due mainly to foreign exchange gain while it recorded other losses of US$0.23 million. Sales rose 6 per cent to US$17.2 million, while loss per share worked out to four US cents, down from seven US cents in the same period in 2018.

Its gross profit margin came down to 28 per cent from 30 per cent a year ago, due to the increase in cost of sales for certain products sold in the United States as a result of higher tariffs levied on products from China, it said. Even with the higher revenue, gross profit slipped one per cent to US$4.75 million as a result of a 9 per cent increase in the cost of goods sold.

For the six months ended Dec 31, revenue was 6 per cent higher at US$31.21 million, while net loss was trimmed to US$8.47 million, from US$11.04 million a year earlier.

Selling, general and administrative expenses in the second quarter and first half year of FY20 fell by 21 per cent and 16 per cent year-on-year, respectively, due mainly to the lower legal expenses for ongoing litigations and write-back of provision for bad debts recovered through liquidation proceeds of a debtor.

Looking ahead, Creative warned: "Market conditions for the group's products remain challenging, and the recent outbreak of the novel coronavirus in China may negatively affect market conditions, although the extent of its effect is presently uncertain." "For the next two quarters, revenue is expected to be lower compared to the current level and the group expects to report an operating loss," it added.

No dividend has been recommended in the second quarter of FY20, as was the case for the corresponding period a year ago.

Creative shares closed five cents lower at S$2.90 on Thursday before the results were announced.