Hi-P Q2 earnings down 19% at S$12.29m

Singapore

CONSUMER electronics manufacturer Hi-P International recorded a near 19 per cent drop in net profit to S$12.29 million for the second quarter ended 30 June as the cost of sales escalated.

This was despite revenue rising 8 per cent to S$302 million on the back of an increase in sales volume.

Gross profit fell by 13.1 per cent to S$29.7 million, while gross profit margin decreased from 12.2 per cent in 2Q2017 to 9.8 per cent in 2Q2018, owing to a change in product mix and more competitive pricing, it said.

Other income more than doubled from S$2.25 million to S$4.76 million, mainly due to higher government incentives granted by the relevant authorities to the group's subsidiaries in China.

Meanwhile, total selling, distribution and administrative expenses increased by 12.2 per cent to around S$19.6 million on the back of increased staff costs resulting from annual salary increments and an increase in social security contributions as imposed by the local authorities.

Earnings per share for the quarter under review eased to 1.52 Singapore cents, down from 1.87 cents previously.

For the six months ended 30 June, net profit declined 4.8 per cent to S$22.38 million, while revenue was 11.3 per cent higher at S$583.1 million.

No dividend will be paid out for the period under review. In the corresponding period a year ago, it declared an interim dividend of 19 cents per share.

Given the outlook for the smartphone, Internet of Things and consumer electronics markets as well as ongoing challenges in the industry, Hi-P said that it would focus on developing new customers and products through targeted business development initiatives, boost allocation from its existing customers, explore inorganic growth opportunities in the automotive and medical industries as well as work to manage costs.

The group also said that it expects higher revenue but similar profit for 3Q2018 as compared to 3Q2017, and similar revenue but lower profit for FY18 as compared to FY17.

Shares in Hi-P closed at S$1.27 on Wednesday, up one cent.