Khind’s 1QFY2023 net profit plunges by 80.6%

KUALA LUMPUR (May 17): Khind Holdings Bhd saw its net profit for the first quarter ended March 31, 2023 (1QFY2023) plunge 80.6% to RM438,000 from RM2.26 million in the corresponding quarter, due to increased distribution and operating expenses amidst challenging market conditions.

In a filing with Bursa on Wednesday (May 17), Khind reported that as a result of the increased distribution and operating expenses, its profit before tax plunged 76.2% to RM750,000 during the quarter compared with RM3.15 million a year ago.

Its revenue decreased 9% from a year ago to RM118.55 million. As a result of the lower profit, Khind’s earnings per share declined to 1.04 sen during the quarter from 5.64 sen in the corresponding quarter in 2022.

According to Khind, the challenging market conditions had led to the revenue of its trading and service division to decrease by 4.6% year-on-year (y-o-y) to RM119.4 million. Meanwhile, the division’s results plunged by 80.03% to RM1.17 million y-o-y.

The trading and service division is Khind’s largest contributor to both its top and bottom lines.

Meanwhile, its manufacturing division saw its revenue slashed by 21.6% y-o-y to RM25.66 million, mainly due to the decrease in intercompany and overseas sales. The division turned a marginal loss during the quarter, from profits in the corresponding quarter.

“The division’s segmental results turned into marginal loss as compared to the previous corresponding period mainly attributed to the lower gross profit from lower revenue despite slight improvement in gross margin.

“The Company continues to focus on improving efficiency and productivity,” said Khind in the Bursa filing.

On a quarter-on-quarter basis, the group’s revenue was 7.7% lower compared with RM128.46 million in the immediate preceding quarter. Its PBT during the quarter represented a 78.3%-plunge q-o-q, due to the same reasons of increased distribution and operating expenses.

The preceding quarter’s results were also propped up by RM2.24 million of other income from the realization of foreign currency translation reserve upon liquidation of a subsidiary, the manufacturer and distributor of home appliances said.

The group said it is cautious on 2023 growth prospects due to continuing geopolitical tensions, rising interest rates, and persistent inflation that impact consumer buying power.

“Nonetheless, the group is actively managing on the supply chain and material cost challenges, also embarking on cost optimisation exercises as well as improving operational efficiency and expanding its regional business,” it said.

Kind said that it is working towards protecting its market position in Malaysia and Singapore and will continue to invest, in some cases, intensify resources in people development, process methodology, data and analytics and enhance branding strategies.

As of Wednesday’s close, Khind was trading at RM2.79, valuing the group at RM117.29 million.