Creative's Q3 loss widens

CREATIVE Technology's net loss widened by more than a third to US$11.7 million for the third quarter ended March 31, 2015, from S$8.8 million a year ago.

The higher net loss was due mainly to other losses (net) of US$4.7 million, compared to other gains (net) of US$0.6 million a year ago.

Revenue for the quarter slumped 9 per cent year-on-year from US$25.1 million to US$22.7 million, due to the uncertain and difficult market conditions which continued to affect the sales of the group's products.

For the nine months ended March, net loss deepened by 66 per cent to US$30.7 million. Revenue fell 16 per cent to US$78.3 million.

Despite the lower sales, there was no significant variance in selling, general and administrative expenses compared to a year ago because of an increase in marketing expenses for new products, and legal expenses for ongoing litigation. Net operating results also improved thanks to the higher gross margin. Gross profit margin for the quarter was 29 per cent, up from 22 per cent a year ago.

Other losses (net) in the third quarter were related to foreign exchange loss of US$6.2 million, which was partially offset by a US$1.8 million gain on disposal of investments.

Research and development expenses in Q3 FY15 dropped 27 per cent, due to cost-cutting measures taken by the management in the previous financial year.

The group expects no significant change in the challenging market conditions. Revenue for this quarter is expected to be comparable to the current level, and Creative expects to report an operating loss.

Loss per share for the quarter worsened to US$0.17, from US$0.12 a year ago, while net asset value per share shrank to US$1.50, compared to US$1.93 as at June 30, 2014. No dividends were recommended for the quarter.

Creative shares closed on Wednesday at S$1.415, up half a cent, before the results were released.