Creative Technology reports fiscal 1Q net loss, pointing to US dollar moves

U.S. five dollar currency note; taken September 2018.

Creative Technology reported on Tuesday that it swung to a fiscal first quarter net loss of US$6.10 million from a year-ago net profit of US$22.83 million, pointing toward U.S. dollar moves.

Sales for the quarter ended 30 September fell 18 percent on-year to US$13.21 million, it said in a filing to SGX after the market close on Tuesday.

“Revenue was lower in the first quarter of FY2019 due to the uncertain and difficult market conditions which affected the sales of the group’s products,” Creative said.

Total expenses fell 27 percent on-year to US$10.09 million, with selling, selling general and administrative expenses down 36 percent on-year at US$6.78 million and research and development expenses down 2 percent on-year at US$3.31 million, Creative said.

“The decrease in selling, general and administrative expenses was due mainly to the lower level of sales and lower legal expenses for on-going litigations,” Creative said.

It swung to a foreign exchange loss of US$301,000 from a year-ago foreign exchange gain of US$568,000, Creative said.

“The exchange differences were due mainly to the cash and cash equivalent balances held by the group. Cash and cash equivalents were held mainly in U.S. dollar, with the balance mainly in Singapore dollar,euro, British pound and Japanese yen,” Creative said.

It added the exchange difference in the fiscal first quarter wasn’t material, but the year-ago exchange gain was due to those currencies’ rise against the U.S. dollar.

Creative also reported no income from litigation settlement, compared with US$31.2 million in the year-ago- period.

Outlook

In its outlook, Creative said it expected the overall market for its products would remain challenging, but that revenue for the current quarter was expected to rise due to the holiday season and a small contribution from its new Super X-Fi product line.

“Shipments of SXFI products commenced in the beginning of the current quarter for the Singapore market. Shipment for U.S. market is expected to commence towards the end of the quarter and revenue contribution for the quarter is not expected to be significant to the overall revenue,” Creative said.

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