SINGAPORE (Aug 13): Courts Asia sank into the red with a net loss of $2.2 million for the 1Q ended June, compared to earnings of $6.1 million a year ago.
1Q18/19 revenue slipped 3.6% to $179.8 million, from $186.6 million a year ago.
The decline was due to a 20.6% drop in Malaysia revenue during the quarter, mainly due to lower earned service charge income. Malaysia revenue accounted for 25.6% of group revenue in 1Q18/19.
The group says its profitability was impacted by an interest rate cap of 15% per annum and new compliance processes, which came into operation in Malaysia at the start of this year.
This was partially mitigated by a 3.9% increase in Singapore revenue due to higher sales of goods from the relaunch of its online platform and the relaunch of Courts Megastore at Tampines in November last year, as well as a 6.4% rise in Indonesia revenue on contribution from higher earned service charge income.
Gross profit fell 14.5% to $61.0 million in 1Q18/19, from $71.4 million a year ago, as gross profit margin fell 4.2 percentage points to 34.0%.
As at end June, cash and cash equivalents stood at $79.8 million.
Courts Asia says it is in the midst of an ongoing business review and transformation in the face of regulatory changes in Malaysia.
“Our group’s business performance continues to be impacted by the interest rate cap imposed by CPAA in Malaysia. However, there are early indicators to suggest that the business transformation work in Malaysia is delivering green shoots,” says Terence Donald O’Connor, Courts Asia’s executive director and group chief executive officer.
The group adds that it is redefining its store strategy in Malaysia and will be downsizing its current Megastore at Sri Damansara to make way for an incoming tenant.
“We will continue to use Singapore to set the benchmark for omni-channel best practices that can be implemented across other markets over time,” says O’Connor. “The team recognises the urgency and is in overdrive mode to deliver the transformation work in Malaysia.”
“Singapore, which contributes to over 70% of the group’s revenue will lead the way and maintain the growth trajectory whilst we work on the business challenges in Malaysia and Indonesia,” he adds.
Shares in Courts Asia closed 0.8 cents lower, or down 4.5%, at 17.1 cents on Monday.
