Courts Asia net profit up 1.7% to S$6.3m

Higher credit sales helped lift bottom line.

Mainboard-listed Courts Asia Limited (Courts Asia) has reported a 1.7% increase in net profit third quarter ending March 31, 2014 (Q3FY13/14).

Also, the company saw a 10.1% increase in group pretax profit from S$7.5 million to S$8.2 million for the same period on the back of a 4.0% increase in sales to S$203.3m.

Sales in Malaysia rose 20.8% in Q3FY13/14 and contributed to approximately 33.0% of the Group’s sales for the quarter. This growth was the result of an aggressive campaign to boost credit sales, as well as an increase in furniture and electrical product sales for the period. The new stores opened by the Group during the current financial year also contributed to the growth.

Revenue from Singapore, which made up approximately 67.0% of the Group’s sales for the quarter, was down by 2.9% due to weaker consumer demand as well as lower bulk sales for the period.

Courts Asia’s Executive Director and Group Chief Executive Officer, Mr. Terence Donald O’Connor, said, “We are pleased that the actions we took in Malaysia since the last quarter have started to yield results. We have successfully implemented a series of measures to recover our credit business which included better customer relationship management (CRM) outreach to our existing customer database and rolling out new pilot credit projects. We will continue to refine our marketing plans in line with our growth pursuit whilst ensuring risk is managed.

“Our sales in Singapore were affected by a weaker retail environment. Nonetheless, Singapore remains our core market and we continue to innovate our business and improve our proposition to customers. To complement our physical store operations, we have expanded our online sales platform, further enhancing our multi-channel capabilities.”

In Q3FY13/14, the Group’s gross profit increased by 12.8%, or S$7.4 million to S$65.2 million from S$57.8 million in Q3FY12/13. Gross profit margin improved from 29.6% in Q3FY12/13 to 32.1% in Q3FY13/14. This was mainly due to higher service charge income derived from increased credit sales in Malaysia.

Consequently, the Group registered a 10.1% increase in pretax profit of S$8.2 million in Q3FY13/14, from the S$7.5 million recorded in Q3FY12/13. As at 31 December 2013, the Group maintained a strong balance sheet with cash and bank balances totaling S$109.6 million.

Mr. O’Connor concluded, “We are focused on prudently growing our presence in existing and new markets by opening suitably sized stores in good catchment areas and broadening our product mix. In Malaysia, our first and second Courts Megastores in Sri Damansara and Subang Jaya commenced operations early this year. These two Megastores, along with our re-entry into Sabah, are also expected to contribute to topline growth. In addition, our first store in Indonesia at Bekasi will open by the end of Q2FY14/15 and we expect our second one at BSD City in Serpong to be operational by the end of the second half of FY14/15.

“Despite the macro-economic volatilities observed recently, the long-term fundamentals for Asia are well secured by a rising middle class and growing disposable income. We remain open to exploring other opportunities in the region and are poised to tap on them as they emerge.”