Hi-P posts 3.3% dip in H1 earnings to S$24.2m

THE net profit of contract manufacturer Hi-P fell 3.3 per cent to S$24.2 million for H1 FY2020 ended June, even as its revenue for the period fell 5.1 per cent to S$543.8 million due to the impact of the Covid-19 pandemic.

The blow was cushioned by a 61.4 per cent rise in other income, from subsidies granted to the company. Losses arising from the share of results of associates also narrowed to S$510,000, from S$1.2 million loss a year ago.

The impact of the pandemic led to Hi-P's gross profit falling by 10.1 per cent to S$68.4 million for H1. Its gross profit margin contracted from 13.3 per cent for H1 last year to 12.6 per cent. This was due to lower revenue and losses from Covid-19-related disruptions for the group's China operations in February.

Hi-P also had an inventory provision of S$1.9 million for H1, compared to a reversal of S$3.4 million a year ago, as well as higher depreciation of property, plant and equipment. The decline was partly offset by government subsidies and cost-control measures.

The company's selling, distribution and administrative expenses went up by 5.6 per cent to S$43.3 million for H1 2020, mainly due to the amortization of intangible assets arising from its acquisition of South East Asia Moulding Company Pte Ltd at end-October 2019, as well as higher employee share award expense.

Hi-P is guiding for higher revenue and similar profit for H2 FY2020 year on year, and also compared to H1 FY2020. It also expects higher year-on-year revenue for FY2020, and similar profit levels as FY2019.

Shares of Hi-P closed at S$1.28 on Thursday, down 0.78 per cent, before the release of its results.