Broadway hit by $1.6m net loss in 3Q

Still better than previous quarters.

According to DBS, excluding forex and one-off items, Broadway reported net loss of S$1.6m, compared to losses of S$2.3m in 2Q13 and S$5m in 3Q12.

Here's more from DBS:

Results missed our S$2.5m profit forecast although sales were in line at S$165m (+21% y-o-y, +2% q-o-q). Gross margins were firm at c.8% but higher sales & admin costs as well as interest expense eroded net profit. More borrowings for capex investments led to a higher gearing of 0.78 from 0.67 in 2Q13.

HDD stabilising but other businesses less profitable. As HDD sales stabilised at around S$90m (-8% q-o-q, c.55% of group sales), losses at the EBIT level narrowed substantially to a mere S$0.1m from a loss of S$2.8m in 3Q12.

Elsewhere, the non-HDD segments were dragged down by higher start up costs for new mobile programmes while contribution from Foam Plastics shrunk because of a less profitable product mix.

2H rebound looks elusive. Broadway has met only 25% of our full year estimates as of 9M13. A 2H rebound would be challenging as HDD is expected to be flat for another year while non-HDD is taking longer to cultivate and the group’s move to right-size operations is progressing slower than desired.