Courts Asia

Courts Asia: 2QFY14 net profit slumped 55% to $7.2m despite a 3% rise in revenue to $222.9m, with the bottom line impacted by a 5.5ppts tumble in gross profit margin to 28.5% from a shift in sales mix and lower service charge income from lower credit sales. The group also recorded a 67% spike in finance costs attributed to more debt and a lack of exchange gain this quarter. On the top line, while sales from Singapore, which accounted for 70%, remain strong with a growth of 11% due to bulk sales for digital products and air systems, sales in Malaysia came as a drag with a slump of 11%, dampened by poor consumer sentiment as the government rolled out policies to curb household debt as well as a reduction in fuel subsidies. The group expects to remain profitable in FY14, although the retail industry in Malaysia is likely to remain challenging. In contrast, Singapore's retail environment is expected to remain relatively favourable.