Published May 5, 2009

More companies issue profit warnings

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THE beginning of the second half of the reporting season has kicked off with a by-now familiar flurry of profit warnings from listed firms, with several expecting losses.

The profit cautions came mostly from consumer-related businesses, including furniture and textiles.

The profit cautions yesterday came mostly from consumer-related businesses, including furniture and textiles.

Furniture player Koda Holdings said it will record a loss for its third quarter ended March 2009, and the loss is likely to be more than it indicated when it reported its Q2 results.

Consumers have been buying less furniture or cheaper furniture, which has affected price per unit and margins.

Lower demand meant existing factories in Vietnam, Malaysia and China operated at less-than-optimum capacity in Q3, and new factories in Vietnam failed to cover fixed operating costs.

Despite the expected loss, Koda said it remains financially strong with positive cash balances and negligible gearing.

Also warning of a loss - for its Q1 ended March 31 - Pine Agritech said its operations and financial results were hit by the global economic slowdown.

Besides weaker export demand, domestic demand fell in line as Chinese consumers cut discretionary spending on general health products.

Ban Leong Technologies said the economic downturn towards the end of 2008 'had a negative impact on our business activities, which affected our overall margins'.

Additional expenses were incurred to clear inventory. And exchange rate fluctuations caused additional expense.

'Though we expect cash flow at March 31 to be better compared with Dec 31, 2008, the group would expect to declare a loss for the financial year ending March 31, 2009,' Ban Leong said.

At Craft Print International, revenue was lower than anticipated as customers held back orders.

'As such, the group expects to report a loss for the half year ended March 31, 2009,' the company said.

Foreland Fabrictech Holdings said that due to the global financial turmoil, there was generally weaker demand in the textile industry in Q1 2009.

It expects its Q1 financial performance to be weaker than that in Q4 2008.

But barring unforeseen circumstances it expects its Q2 financial performance to improve, as a relatively stronger demand has been noticed lately.