These 2 Companies Announced Mixed Results In Their Latest Quarterly Earnings Updates
The earnings season had recently come to an end. As is common with every earnings season, there will be some companies posting growth, some posting mixed numbers, and some experiencing declines. Let’s take a look at two companies that delivered mixed results recently:
1. In mid February JUMBO Group Ltd (SGX: 42R) released its first quarter earnings update for its fiscal year ending 30 September 2018 (FY2018). The reporting period was from 1 October 2017 to 31 December 2017.
As a quick introduction, JUMBO is a restaurant operator that is perhaps most famous for the chili crab served in its JUMBO Seafood chain of seafood restaurants. The company also has other eateries under its banner, including NG AH SIO Bak Kut Teh, Chui Huay Lim Teochew Cuisine, J Café, and Singapore Seafood Republic. JUMBO has business interests in Singapore, China, Taiwan, Vietnam, and Japan.
In the reporting quarter, JUMBO experienced a 9.3% year-on-year increase in revenue to S$35.7 million. But, its net profit attributable to shareholders fell by 19.8% to S$2.1 million, mainly due to promotional activities and higher operating costs, which resulted from the opening of new outlets and the expansion of the company’s corporate office in China.
On the future, JUMBO commented in its earnings update that the “F&B industry is expected to continue to be challenging due to pressure on operating costs and keen competition,” with the key challenges including “human capital and rising costs.”
But, the company will continue to “explore suitable opportunities to expand [its] network of F&B outlets and business through the opening of new outlets, acquisitions, joint ventures and/or strategic alliances with partners who can strengthen [its] market position and add value to [its] existing business.”
2. Dutech Holdings Ltd (SGX: CZ4) is the next in line. The company reported its 2017 fourth quarter and full year earnings update in early March.
During the reporting quarter, Dutech saw its revenue climb by 4.4% year-on-year to RMB 463.8 million, on the back of organic growth and acquisitions. But, a change in sales mix to products with lower margins and higher expenses from the consolidation of subsidiaries resulted in a big 59.8% drop in net profit to RMB 8.4 million.
As a quick introduction, Dutech is in the business of making safes, with a focus on ATM and banking safes. It is the largest manufacturer of high security products in Asia.
In its earnings update, Dutech provided the following statement on its outlook:
“The management expects trading condition to remain challenging. Rising raw materials prices, ATM sale market shrinking will serve to affect group performance. On the other side, our gaming machine sales are strong in 2018. As a whole, management expects the Group to remain profitable in Q1 2018.
The Group will continue its efforts in expanding new products lines to reduce the risk of shrinkage of ATM markets. Meanwhile we will also continue to focus on innovation and the development of new generation of Ticketing and Vending Machines.
After acquiring Krauth, Metric UK and the purchase of certain assets of Metric AG, we will focus on the integration synergies in joint development of self-service terminals.”