Weaker export sales put skid on Stamford Tyres Corp's earnings

Stamford Tyres Corp has posted a 63 per cent drop in third quarter net profit to $838,000.

Revenue for the three months to Jan 31 fell by 3 per cent to $71.7 million, mainly due to weaker exports of Sumo Firenza and mining tyres.

Gross profit dropped to $16.6 million from $17 million but gross margin inched up to 23.2 per cent compared to 23 per cent previously.

This was mainly attributable to lower cost of sales and continued higher contributions from value-added services at its Stamford Tyres Mart retail chain and truck tyre centres.

Operating expenses were 12.7 per cent lower at $12.8 million, due to cost reduction efforts.

Stamford Tyres made allowance for doubtful receivables of $1.6 million. These were mainly due to collection issues in Indonesia.

It also booked foreign exchange losses of $1.2 million, mainly due to unrealised translation losses from the strengthening of the Singapore dollar against the Indonesian rupiah.

Allowance for inventory obsolescence amounted to half a million dollars, mainly in respect of slow moving inventories.

Earnings per share slipped to 0.36 cent from 0.95 cent previously while net asset value per share eased to 50.21 cents compared to 51.04 cents as at April 30.

Looking ahead, the company noted that the operating environment was expected to continue to be challenging.

"To mitigate this challenging environment, the group will continue to optimise its product mix and manage operating costs so as to enhance its performance."