KUCHING: Electronics maker Panasonic Manufacturing Malaysia Bhd (Panasonic Malaysia) saw earnings of RM23.6 million for the second quarter of its financial year 2018 (2QFY18), bringing its 6MFY18 earnings to RM63.2mm lagging expectations.
This accounted for 43.4 and 44 per cents of MIDF Amanah Investment Bank Bhd (MIDF Research) and consensus’ full year FY18 earnings forecasts respectively.
The firm said against last year, revenue and earnings dropped 5.1 per cent and 23.2 per cent respectively while revenue and earnings dropped at a faster pace on a quarterly basis at 15.3 per cent and 40.3 per cent respectively.
The weaker than expected 2QFY18 performance was due to the earlier Raya Aidilfitri celebration which fell in June 2017 as well as slower demand of products after Raya Aidilfitri.
“Home Appliance segment continues its strong growth from the previous quarter,” MIDF Research said in its analysis yesterday.
“Its revenue grew by 13.7 per cent year on year (y-o-y), mainly contributed to the increase in export sales due to thesales recovery from the United Arab Emirates as the economic environment in the Gulf improves and; prolonged rainy season in Vietnam which boosted the sales for home shower products.
“Consequently, the profit before tax (PBT) increased by 46.1 per centyoy to RM52.1 million. This was mainly due to the increase in export revenue, and absence of development and tooling costs that was incurred in the previous year with the introduction of new range of rice cooker products.
“Meanwhile, fan and other products’ segment dopped by 6.3 per cent y-o-y which was caused by declining demand from the domestic market and a slowdown in government projects for installation of fans.”
Consequently, due to a tighter margin, MIDF Research saw that the fan and other products’ segment achieved a PBT of RM54.9 million which is lower by 8.4 per cent y-o-y.
The lower earnings is attributable to the rising costs of raw materials as well as a higher operation expenses incurred, it added.
“As the domestic demand is expected to be weaker, the segment is increasingly reliant on export sales particularly to the Middle East market to drive performance.
“We expect that the performance for FY18 will be affected by the strenghthening of ringgit and weakening of US dollar and the recent slow down in the growth of Malaysia Manufacturing Index.
Nevertheless, we expect the performance in FY19 will improve due to the completion of two new plants in 2018 and 2019 respectively which is expected to increase production capacity by 25 per cent; and increasing demand from the Middle East as a result of better economic environment due to the higher crude oil prices.
“Post earnings announcement, we are revising our FY18F earnings forecasts down by 5.82 per cent as we believe the stronger ringgit will have a stronger downside impact on export revenue than the benefit gain from a lower raw material costs.
“However, we are maintaining our FY19F earnings estimates as we expect that the pick-up in demand from the Middle East and additional capacity will assist in revenue and earnings growth going forward.”