YHI International nine-month net profit slips 67.6% to S$5.6m

Challenging business environment blamed for weak demand.

Singapore Exchange Mainboard-listed YHI International Limited (YHI) reported revenue of S$389.2 million for the nine months ended 30 September 2013 (9MFY2013) and a net profit attributable to equity holders of the
company (net profit) of S$5.6 million.

This compares with the revenue of S$414.2 million and net profit of S$17.3 million in the same period last year (9MFY2012), or a 67.6% decline in net profit.

The global business environment continued to be challenging as consumers are more cautious towards spending on discretionary automotive products amid a weak global economy. As a result, demand for the Group’s products in both the distribution and manufacturing segments remained weak for the period under review.

Revenue from the distribution segment, which makes up of 72.1% or S$280.7 million of the total revenue, remains as the main contributor of the Group’s turnover in 9MFY2013. The manufacturing segment, which makes up the balance of 27.9% registered a revenue of S$108.5 million for the period.

Gross profit for 9MFY2013 decreased by 12.9% from S$95.1 million in 9MFY2012 to S$82.8 million, was mainly attributable to lower turnover and gross profit margin for both distribution and manufacturing businesses. The Group’s gross profit margins declined to 21.3% from 22.3% in tandem with lower margins from the distribution and manufacturing business segments as competition for both segments intensified during the period.

Total operating expenses of the Group in 9MFY2013 were slightly up as compared to the same period last year. Distribution expenses rose about 6.2% to S$36.8 million in 9MFY2013 compared to S$34.7 million in the corresponding period last year mainly due to higher staff costs to boost its marketing activities.

However, the increase in distribution expenses were partially offset by a decrease in its administrative costs and financing costs, which were mainly due to the lower bonuses accrued and lower borrowings in certain subsidiaries for the period respectively.

Earnings per share were 0.95 Singapore cent for the nine months ended 30 September 2013 compared with 2.66 Singapore cents last year.

Executive Chairman and Group Managing Director, Mr Richard Tay said: “The outlook of the global economy continues to be uncertain despite the improved economic data of China and the USA and competition has intensified for both our distribution and manufacturing segments. In response to these uncertainties in the business environment, we will continue to hold a tight rein on our operating costs and stepping up on our marketing efforts to widen and strengthen our products, business networks and manufacturing capabilities. This is in line with our strategic move to lay a firm foundation for our businesses, so as to stay ahead of competition when the global economy turns for the better."

Moving forward, the global economic outlook remains uncertain. While the economic data of China and the USA have shown signs of improvements, consumer demand from Europe still remains relatively weak.

"Looking ahead, the Group will continue to focus on strengthening our business network on a global basis to grow our business, intensifying our brands building efforts, continual product and design innovation, and improving our production systems to enhance quality, productivity and reduce operating costs to stay competitive in the marketplace.", added Mr Tay.