YHS posts net loss of RM5.4m in 2Q

Beverage maker Yeo Hiap Seng (Malaysia) Bhd (YHS) posted a net loss of RM5.35 million in its second quarter ended June 30, 2010 (2QFY10) versus a net profit of RM2.14 million a year earlier, following a 27.4% decline in revenue to RM103.22 million from RM142.25 million.

The lower revenue was due to the termination of the distribution rights for Red Bull products effective April 1, 2010 and lower sales to Indonesia as a result of the cancellation of 15 Makanan Luar Negeri (ML) registration numbers of the total 31 ML numbers issued to PT YHS Indonesia, a wholly-owned subsidiary of the company.

YHS declared an interim dividend of five sen per share less tax totalling RM5.73 million versus three sen per share less tax amounting to RM3.44 million year earlier.

In its results announcement to Bursa Malaysia yesterday, YHS said it recorded a lower operating profit of RM2.5 million from RM2.8 million a year earlier due to the weaker Singapore dollar and Indonesian rupiah which gave rise to unrealised foreign exchange losses.

The quarter’s operating profit was also lower than the RM8.3 million recorded in 1QFY10 due to the high festive season sales in the preceding quarter and the termination of the distribution rights for Red Bull products from the beginning of 2QFY10, said YHS.

For the six-month period, YHS’ performance improved, with a net profit of RM264,000, or 0.2 sen per share, against a net loss of RM6.59 million a year earlier, despite a 6.1% decline in revenue to RM254.43 million.

YHS said year to date, its operating profit had improved due to higher margins from its Yeo’s brand products, lower material costs and better control over overhead costs.

“However, the impairment of property, plant and equipment reduced the year-to-date pre-tax profit to RM250,000 as compared to preceding year-to-date pre-tax loss of RM5.6 million after the impairment loss of quoted investments,” it said.

YHS had performed an impairment assessment in conjunction with its business operations consolidation, which resulted in an impairment of RM11 million on its property, plant and equipment in the quarter under review.

The stock closed at RM1.66 yesterday, down five sen, and is trading roughly on par with its net assets per share of RM1.64 as at June 30, 2010.


This article appeared in The Edge Financial Daily, July 28, 2010.