Stamford Tyres reported Friday its fiscal first half net profit dropped 60.3 percent on-year to S$696,000 amid lower sales in Southeast Asian markets and higher operating expenses.
Total revenue for the six months ended 31 October declined 8 percent on-year to S$90.14 million, the global distributor of tyres and wheels said in a filing to SGX.
Wee Li Ann, executive director of Stamford Tyres, pointed to the challenging economic outlook.
“To address the challenges arising from the uncertainties due to the Covid-19 pandemic and intense market competition, the group has
deployed resources and implemented strategies to diversify its product offerings to adapt to the ongoing market changes. We have also taken more steps to right-size our operations during the year,” Dr. Lee said in the statement.
“We will continue to focus on growing our sales of car tyres and SSW wheels, as well as truck tyres and mining tyres. We are also focusing on improving our sales productivity and upgrading value-added segments such as Stamford Tyres Mart retail chain and truck centres,” she added.
The gross profit margin increased to 27.6 percent in the fiscal first half, compared with 23.1 percent in the year-ago period, mainly on higher margins from both distribution and the wheel manufacturing segment, Stamford Tyres said.
Total operating expenses increased 11.5 percent on-year to S$25.2 million in the fiscal first half, mainly on higher labor costs, particularly for tyre fitters, and a higher allowance for doubtful receivables after the assessment of Covid-19’s impact on foreseeable credit losses, as well as additional provision for inventory obsolescence, the report said.
Salaries and employee benefit expenses rose 28.11 percent on-year in the six-month period to S$10.87 million, and other operating expenses increased 10.84 percent on-year to S$3.63 million, the filing said.
The company increased its inventory to S$90.6 million in the period, from S$81.3 million in the year-ago period, in anticipation of supply-chain issues, the filing said.
Stamford Tyres issued a downbeat outlook.
“The operating environment in the tyre business remains challenging as a result of intense competition and uncertainties arising from the Covid-19 pandemic,” the company said in the statement.
“To mitigate the impact of this challenging environment, the group will continue to optimize its product mix, manage operating costs and build on its core markets in South East Asia,” it added.
Stamford Tyres is a global distributor of tyres and wheels, and has a wheel factory. The company has Southeast Asian regional retail operations, and truck and off-the-road tyre-managemetn services.