KUCHING: WTK Holdings Bhd’s (WTK)earnings for the nine months of 2014 (9M14) were slightly below expectations, owing to higher-than-expected effective tax rates.
“WTK’s 9MFY14 core net profit was below expectations, coming in at 62 per cent of our and 55 per cent of consensus’ FY14 forecasts, respectively,” outlined analysts at RHB Research Institute Sdn Bhd in a note on the group yesterday.
“The main variance was higher-than-expected effective tax rate recorded in 3Q14 of 34 per cent which was up from 20 per cent seen in the first half of the year,” it added.
“Assuming taxes return to normal in 4Q14, FY14 effective tax rate would come down to 25 per cent, which is still higher than our 20 assumption.
“We are therefore raising our effective tax rate for FY14 to 25 per cent, while leaving our 24 per cent projection unchanged for FY15.”
The group’s 9M14 core net profit fell eight per cent year on year on the back of a two per cent drop in revenue.
Although WTK’s timber division recorded a 34 per cent year on year growth in profit before tax, RHb Research said this was offset by lower contributions from its manufacturing division which deopped by 48 per cent year on year.
In 9MFY14, timber revenue rose one per cent year on year mainly due to higher log prices, higher log volumes and higher plywood prices, offset by lower plywood volumes.