Pelikan International Corporation Bhd posted a net profit RM111.41 million for the first quarter ended March 31, 2010 compared to RM8.02 million a year ago.

Its revenue for the quarter dipped to RM272.8 million from RM285.4 million a year earlier.

The overall sales for the current quarter were softer as a result of the uncertain market conditions in major markets where the group trades in, particularly in Europe.

In addition, the weakened euro currency against ringgit Malaysia in the current quarter had contributed to the lower revenue when translated into the reporting currency.

In the current quarter, as a result of the acquisitions of Herlitz, Molkari and Ganymed, it recognised negative goodwill resulting from the said acquisitions of RM143.1 million.

The group has plans for merger and reorganisation of its business operations with that of Herlitz and has identified and provided for related expenses amounted to RM41.9 million in the current quarter.

Operationally, without taking into account the negative goodwill and provision for expenses mentioned above, the group's results in the current quarter was slightly higher than the corresponding quarter last year with profit after tax of RM10.8 million.

The profit in the current quarter was also partly affected by exchange loss recognized in the profit and loss of RM2.7 million (corresponding quarter in 2009: RM0.4 million exchange loss). The reduction in finance costs and improvement in the profit of associate contributed positively to the results of the current quarter.

Turnover in the first four months this year, especially in April, was lower than in 2009 mainly due to the lower demand and uncertain economic condition in Europe (our largest market) particularly in Italy, Spain and Eastern Europe. However, margin was not significantly affected because the loss in turnover was mainly contributed by lower private label, non-branded sales of hardcopy products with low margin.

Its markets in Latin America and Middle East are also expanding and indicated good progress to date, despite global economic slowdown. However, their contributions are smaller as compared to from Europe and therefore, the overall sales and results have not been significantly influenced by the positive development in these markets.

The acquisition of Herlitz had been completed and the group was actively coordinating merger plan to deliver the desired synergies, common cost savings and cross-selling opportunities.