Published February 17, 2009

Five firms warn of losses, lower profits

By NISHA RAMCHANDANI

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FEELING the impact of the economic slowdown, at least five companies issued profit guidance yesterday.

Advanced Integrated Manufacturing Corp and United Food Holdings warned of fourth-quarter and full-year 2008 losses, while Full Apex Holdings, Financial One Corp and AnnAik stated that profits would be lower.

United Food had already warned in its Q3 results announcement that it could post a 'significant loss in Q4' if the prices of commodities - especially soya bean - kept sliding. In addition, United Food has ceased its processed meat products division, bio-medical division as well as its fresh, chilled and frozen pork division.

As a result, the group is making provisions on the net realisable value of the soya bean and the impairment of assets from the ceased divisions, resulting in a 'significant loss for FY2008'.

Advanced Integrated warned of an impairment loss as its available-for-sale investments and intangible assets had seen a decline in value below investment cost, as at Dec 31, 2008. However, 'the recognition of the impairment loss on the investment has no impact on the company's cash flow', the company said in a statement.

Contrary to a statement in August where the group said that it was 'confident' of profits in H208 'barring unforeseen circumstances', AnnAik is expecting a marginal loss for H208 due to factors including lower steel prices, operating expenses from a newly set up plant in China, lower profit contribution from its associate as well as higher income-tax expenses. This will translate to lower profits year on year for FY08.

This is in sharp contrast to a year ago, when the group had expected FY08 results to be 'better' than the previous year barring unforeseen circumstances.

And the change in the economic conditions where its subsidiaries operate has resulted in an increase in the allowance for impairment loss and write-off for Financial One.

The company provides financing services to a customer base consisting mainly of small and medium-sized enterprises (SMEs) in markets such as Taiwan, the United States, Thailand and China.

The group is expected to report a loss for Q4 and a 'significant decrease of profit' for the financial year.

Meanwhile, volatile crude oil prices have taken their toll on Full Apex, which will be releasing its results on Feb 28. The group's main business lies in the production of polyethylene terephthalate (PET) bottles used for beverages.

'Crude oil prices saw a sharp decline in the last quarter of 2008 which resulted in correspondingly lower PET chips selling prices,' said Full Apex. The company will make a provision in respect of its PET chips stocks, it added.

Advanced Integrated will be reporting its financial results for the full year later this month, while United Food will do so 'on or before March 1'. AnnAik is to release its FY08 results before the end of this month.