Maxi-Cash reports 2Q19 net profit dropped 20 percent amid lower retail sales

Maxi-Cash outlet in Singapore’s Little India neighborhood; taken in October 2018.Maxi-Cash outlet in Singapore’s Little India neighborhood; taken in October 2018.

Maxi-Cash Financial Services reported Thursday its second quarter net profit dropped 20 percent on-year to S$2.80 million amid lower sales from the retail and trading of jewelry and branded merchandise.

Revenue for the quarter ended 30 June fell 19 percent on-year to S$45.36 million, the pawnshop operator said in a filing to SGX.

Depreciation and amortization costs jumped 325 percent on-year to S$2.23 million on changes to the accounting for leases, the filing said.

Finance costs increased 15 percent on-year to S$3.16 million for the quarter on a higher interest rate charged on loans and on changes to accounting for leases, Maxi-Cash said.

Material costs fell 29 percent on-year to S$26.39 million for the quarter, generally in line with lower revenue and on lower costs from the retail and trading of jewelry and branded merchandise, the filing said.

For the first half, the pawn-shop operator reported net profit rose 6 percent on-year to S$5.6 million on revenue of S$91.97 million, down 16 percent on-year.

The pawnbroking business posted an around 16.3 percent revenue increase in the first half, mainly on higher interest income from a growing pledge book, Maxi-Cash said.

The retail and trading of jewelry and merchandise business posted a 22 percent on-year drop in revenue for the first half, the filing said.

The secured lending business reported a 14.3 percent on-year revenue increase for the first half, Maxi-Cash said.

The pawnshop operator declared an interim dividend of 0.25 Singapore cent, compared with 0.30 Singapore cent in the year ago period.

Maxi-Cash issued a cautious outlook.

“The uncertain economic conditions continue to impact job creation and consumer sentiment which affected our retail and pawnbroking
businesses. Keen competition, increasing operating costs, volatile gold price and exchange rates posed further challenges,” the company said. “To mitigate the impact from these challenges, we will continue to improve our operating effectiveness and efficiencies.”

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