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Hi-P turns around with S$8.4m Q1 profit despite revenue fall

Singapore

MANUFACTURER of consumer electronics Hi-P International has reversed from a S$12.4 million net loss a year ago to register a net profit of S$8.4 million for the three months ended March 31, 2017.

This comes even as it saw an 11.4 per cent drop in revenue to S$244.2 million.

Details of its first-quarter results were released on Thursday. No dividend was declared.

Singapore-based, mainboard-listed Hi-P said that the fall in revenue was due to fewer high component content assembly products.

But net profits increased. This was due to a better product mix, improved operational efficiency and cost management, and lower inventory provision and scrap expenses.

Net interest expense fell by 87.6 per cent to S$0.1 million for Q1 2017 as its net debt position improved.

Other income decreased by 21.9 per cent to S$1.3 million for Q1 as it received fewer government incentives.

Other expenses decreased by 54.8 per cent to S$3.6 million. This was due to lower net loss arising from net foreign exchange differences and fair value loss on hedging contracts.

The group saw an income tax expense of S$3.5 million for Q1, representing an effective tax rate of 29.3 per cent. This was the result of taxes imposed on profitable entities, and certain deferred tax assets not being recognised.

The group has been improving inventory management which has helped raised operational efficiency, a key reason why net profits rose.

Because of these efforts, the group's inventories decreased 10.5 per cent from S$142.9 million as at Dec 31, 2016 to S$127.8 million as at March 31, 2017.

"We have made tremendous improvements to overall operational efficiency and remain well positioned to capture growth opportunities," said Yao Hsiao Tung, the group's executive chairman and chief executive officer.

Hi-P's counter closed 4.93 per cent higher at S$0.745 on Thursday before the announcement.