Hup Seng fourth quarter earnings down 11.5% on lower margin

PETALING JAYA: Biscuits manufacturer Hup Seng Industries Bhd’s net profit for the fourth quarter ended Dec 31, 2018 fell 11.5% to RM12.74 million from RM14.38 million a year ago mainly due to poorer margin in certain segment coupled with higher incentive and promotional sponsorship activities given to the distributors during the current quarter.

The group’s revenue for the current quarter decreased slightly by 0.4% to RM85.85 million from RM86.22 million in the quarter ended Dec 31, 2017 as domestic sales registered a drop of 2%.

For the full-year period, Hup Seng’s net profit fell 3.3% to RM42.96 million from RM44.45 million a year ago, with revenue increasing 2.6% to RM307.37 million from RM299.67 million.

It recommended the payment of a third interim dividend of 2 sen per share for the financial quarter under review.

Hup Seng said the operating environment over the next six months is expecting weak domestic growth, uncertainty in global demand and prudent investment in business expansion. Faced with uncertain global and domestic economic prospects, consumers will once again be expected to be more prudent with their spending, leading to weaker sentiment on retail consumption for 2019.

“The group witnessed some margin compression arising from costs pressures amid continued growth in revenue. Nevertheless, the group will continue its efforts to enhance operating efficiency to mitigate as much as possible the impact of higher input costs. The group will continue to focus in improving the group’s performance by innovating products portfolio, broadening the distributor network to safeguard the group’s revenue and profitability,” it said.

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