Stamford Tyres reverses into losses for FY20, halves dividend

MAINBOARD-listed Stamford Tyres on Monday posted a net loss of S$4 million for FY20, reversing from a humble profit of S$474,000 a year ago.

This was due to a one-time expense relating to the closure of a loss-making operation in Australia in Q2 FY20, as well as higher allowance for doubtful receivables as a result of delayed and non-payment of trade receivables due from customers because of Covid-19 (among other reasons); the various government-imposed lockdowns in its key markets such as Malaysia and Thailand were also a factor.

A decline in revenue was also partly to blame. For its full year ended April 30, the tyre and wheel distributor's revenue also fell 14.7 per cent to S$199.9 million, mainly due to lower sales in South-east Asia and the rationalisation of non-profitable operations in China and in Queensland, Australia. 

The group's earnings per share decreased from 0.2 cents for FY19 to a loss of 1.7 cents for FY20.

Wee Kok Wah, president of Stamford Tyres, said: "To address the challenges arising from the global oversupply of tyres, intense market competition and uncertainties arising from the Covid-19 pandemic, the group has deployed resources and implemented strategies to diversify its product offerings to adapt to the ongoing market changes. We have also taken more steps to right-size our operations and this is reflected in the lowering of operating costs during the year.

"We will continue to focus on growing our sales of car tyres and SSW wheels, as well as truck tyres and mining tyres. We are also focusing on improving our sales productivity and upgrading value-added segments such as Stamford Tyres Mart retail chain and truck centres."

The directors have recommended a first and final dividend of 0.5 cent per share, halved from a year ago.