Consumer electronics manufacturer Hi-P International recorded a near 19 per cent drop in net profit to $12.29 million for the second quarter ended June 30, as the cost of sales escalated.
This was despite revenue rising 8 per cent to $302 million on the back of an increase in sales volume.
Gross profit fell by 13.1 per cent to $29.7 million, while gross profit margin decreased from 12.2 per cent in the second quarter of last year to 9.8 per cent, owing to a change in product mix and more competitive pricing, it said.
Other income more than doubled from $2.25 million to $4.76 million, mainly due to higher government incentives granted by the relevant authorities to the group's subsidiaries in China.
Meanwhile, total selling, distribution and administrative expenses increased by 12.2 per cent to $19.6 million on the back of increased staff costs resulting from annual salary increments and an increase in social security contributions as imposed by the local authorities.
Earnings per share for the quarter under review eased to 1.52 cents, down from 1.87 previously.
For the six months ended June 30, net profit declined 4.8 per cent to $22.38 million, while revenue was 11.3 per cent higher at $583.1 million.
AT A GLANCE
REVENUE: $302 million (+8%)
NET PROFIT: $12.3 million (-18.6%)
No dividend will be paid out for the period under review. In the corresponding period a year ago, it declared an interim dividend of 19 cents per share.
Given the outlook for the smartphone, Internet of Things and consumer electronics markets as well as ongoing challenges in the industry, Hi-P said it would focus on developing new customers and products through targeted business development initiatives, boost allocation from its existing customers, explore inorganic growth opportunities in the automotive and medical industries as well as work to manage costs.
The group said it expects higher revenue but similar profit in the third quarter, and similar revenue but lower profit for the full year.
Hi-P shares yesterday closed at $1.27, up one cent. The results were announced after market close.