Haw Par's FY2020 earnings slide 34% on weak consumer spending

TIGER Balm could not soothe the pain from the Covid-19 pandemic, as analgesic maker Haw Par Corporation saw earnings fall 34.3 per cent to S$119.8 million for FY2020 ended December.

Revenue for the full-year plunged 54.5 per cent year-on-year to S$111.03 million, hit by weak consumer spending amid the Covid-19 outbreak, the company said in its results on Monday evening.

But its bottom line still exceeded revenue, thanks to S$106.8 million in other income, arising from dividend and interest income.

This expanded Haw Par's kitty. Its cash holdings grew 19.1 per cent to S$554.4 million, boosted by the dividends from strategic investments, proceeds from the net sales and purchase of investments and cash generated from operations. The firm had no debt as at the end of last year. 

Haw Par has proposed a final dividend of S$0.15 a share, bringing its total dividend payout for FY2020 to S$0.30 a share. This is unchanged from FY2019.

Segment-wise, Haw Par's healthcare division suffered most significantly. The "drastic drop" in demand for its healthcare products led to its gross margin shrinking from 57.2 per cent to 44 per cent, due to excess capacity at its manufacturing facilities. The healthcare segment's operating profit thus dropped by a sharp 78.3 per cent to S$16.2 million.

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Haw Par's leisure and property divisions were also hit by the pandemic, with contributions falling 9.8 per cent to S$18 million. Its Underwater World Pattaya attraction in Thailand went into operating loss, hit by international border closures, as well as domestic travel restrictions from March 2020.

But this was partly cushioned by higher average occupancy at Haw Par's Singapore properties. Overall, total net operating profit from these segments decreased by 15.5 per cent to S$9.1 million.

Nevertheless, Haw Par also saw costs go down amid the pandemic. Distribution and marketing expenses decreased by 54.5 per cent to $21 million, while finance expenses fell 61.2 per cent to S$76,000, due to the full repayment of bank borrowings in the first half of 2020.

On its outlook, Haw Par said: "Recovery of the group's operating businesses is expected to be slow, due to the protracted Covid-19 pandemic crisis and the weak global economy. The group's strategic investments will continue to experience volatility from the uncertainties in economic recovery."

Shares of Haw Par closed at S$12.18 on Monday, up 3.48 per cent, before the results announcement.