Door maker KLW Holdings narrows Q3 losses by 39% to $1.1m

SINGAPORE (THE BUSINESS TIMES) - Although export sales of doors improved for KLW Holdings in the third quarter, its selling and distribution expenses more than doubled and administrative expenses stayed at nearly 30 per cent of revenue, resulting in the door maker continuing to bleed red ink.

But the losses for the quarter ended September at $1.08 million were 39 per cent lower year-on-year, according to the financial statements KLW filed with the Singapore Exchange on Friday (Feb 14).

Among the headwinds that may affect its financial performance going forward are the impact of the coronavirus outbreak on its Dongguan factory in China.

The third quarter losses came despite revenue being 7 per cent higher at $7 million, on the back of greater export sales of doors.

Loss per share was also narrower at 0.02 Singapore cent versus 0.033 cent a year ago.

Net asset value per share declined marginally to 1.30 cents as at end-December, down from 1.38 cents as at end-March last year.

While quarterly results improved, the Catalist-listed firm saw losses for its nine-month period widen to $4.48 million from $3.95 million in the preceding year. This was due to a drop of 19 per cent in its revenue to $19.5 million, hit by lower export sales. Therefore, the nine-month loss per share also widened to 0.083 cent from 0.073 cent.

No dividend was declared.

KLW has flagged several events that might be headwinds for its financial performance.

It said it remains to be seen if export sales can be sustained in the foreseeable future. While there is greater political certainty with Brexit finally happening, the operating environment remains challenging. Although there is an easing in trade tensions between the US and China, the group has yet to see the benefits in its sourcing of raw materials from the US.

Also, KLW's Dongguan factory in China has been affected by the Covid-19 outbreak, which originated in Wuhan. As uncertainty remains, it is closely monitoring and assessing the potential impact on the financial performance of the group, and will provide updates to the market if it is concluded that there will be material impact.

"The group will endeavour to further streamline operational processes wherever possible with a view to improving productivity and bringing down costs. This includes reviewing assets and resources that are not performing to expectations and determining how they can be optimised," KLW said.

On this note, it is pushing ahead with the proposed disposal of Key Bay Furniture. The long-stop date for the sale has since been extended to March 9.

KLW shares closed down 25 per cent to 0.3 cent on Friday.