Stock Review - YHI International

REVIEW OF Q107 FINANCIAL RESULTS

You can obtain the financial results here.

The Group’s turnover for Q1'07 (of S$96.0 mil) was S$0.2 mil or 0.2% higher than the S$95.8 mil recorded in Q1'06. Turnover from the manufacturing business increased by ~S$8.6 mil or 36.6% from S$23.5 mil in Q1'06 to S$32.1 mil in Q1'07. The increase was primarily due to increased output from additional production capacity in Suzhou, PRC.

Turnover from the distribution business decreased by approximately S$8.4 mil or 11.6% from S$72.3 mil in Q106 to S$63.9 million in Q107. The decrease was primarily due to exclusion of sales from Yokohama tyres in the PRC region as a result of formation of a joint venture entity in which the Group has a 49% stake. Distribution and administrative expenses were lower in Q1'07 as compared to Q1\'06 mainly due to lower advertising and promotional expenses and lower allowance for impairment of doubtful receivables.

Finance costs in Q1'07 were higher as compared to Q1'06 attributable to higher borrowing costs incurred.Total Group’s GPM Q1\'07 decreased by about 1.8% as compared to Q1'06 attributable to lower gross margin from manufacturing business which was mainly affected by the rising aluminum prices and also operating losses due to diseconomies of scale in the Malaysia plant which is currently operating on a single production line. The Group’s PBT increased by ~S$0.3 million or 3.7% from S$6.8 million in Q1'06 to S$7.1 mil in Q1'07. Total current assets increased by ~S$13.1 mil due to increase in receivables of ~S$12.5 million, and in inventories of ~S$4.4 mil together with a reduction of S$3.5 mil in cash. The increase in trade receivables was due to timing differences and this is in line with normal trading activities.

The increase in inventories was primarily due to higher stockholdings in view of price increases from suppliers. The reduction in cash was primarily due to working capital changes. The increase in available-for-sale financial assets of ~S$0.4 mil was due to additional investments in Hangzhou Yokohama Tire Co Ltd. The increase in investment in associated companies of ~S$0.9 mil was due to share of profits contributed by the associates in OZ S.p.A and Yokohoma Tire (Shanghai) Sales Co Ltd.

The increase in current liabilities of ~S$8.5 million was primarily due to increase in trade payables of ~S$2.6 million from higher trading activities and an increase of ~S$5.0 million in current bank borrowings. Our cash flow for the period showed a net decrease in cash of about S$4.2 million in Q1'07 as compared to a net decrease of ~S$8.0 mil in the same period last year primarily due to lower capital expenditure spendings.