Kian Ho full-year net profit improves to $1.3m

Cost and inventory management proved effective.

Kian Ho Bearings Ltd has posted a revenue of $78.8 million for the full year ended 31 December 2013 (FY13), compared to $85.4 million recorded for the previous financial year (FY12), with net profit attributable to shareholders improving to $1.3 million, versus $1.2million in FY12. Meanwhile, earnings per share was 0.55 cent, compared to 0.50 cents for FY12.

Commenting on the Group’s FY13 performance, Managing Director Mr Teo Teng Beng said, "Overall, FY13 was a challenging year as global export demand and prices for bearings and seals remained depressed, even as domestic activities in a few ASEAN markets were reasonable healthy. I am encouraged however, that our relentless effort towards managing our cost and inventory, did enable us to rise above the circumstances to reap a return.”

During the year, the Group enjoyed sustained business activity in the overall Maintenance, Repair and Overhaul (MRO) and Original Equipment Manufacturing (OEM) business segments in both the Singapore and Vietnam domestic markets. It also enjoyed recovery of its Malaysia domestic market in the second half of the year, while the sale of seals products also remained fairly stable throughout the year.

However, challenging market conditions in Taiwan and Mainland China, along with a general softening of export demand for the Group’s products and a significant reduction in orders from an OEM customer in Singapore led to an erosion of Group revenue. Nevertheless, the Group managed to maintain a healthy gross profit margin of 21%. The decline in revenue and the corresponding drop in gross profits were mitigated by stringent cost monitoring and cost-cutting measures taken during the year.

The Group’s net cash generated from operating activities improved to a positive $8.8 million (2012: $3.6 million deficit) mainly due to stringent control over inventory purchases in line with lower business activities during the year. In line with its dividend policy to pay an annual dividend of at least 30% of annual net profit after tax, while being guided to aim for 1 cent in total annual dividend at the same time, Kian Ho is declaring a first and final cash tax-exempt dividend of 0.2 cent per share for the financial year, which represents a payout ratio of about 43%.

The Group expects the global operating environment to remain challenging and competitive in the year ahead. It will focus on enlarging its customer base for its products in the MRO as well as OEM business segments in the countries where it operates. Barring any unforeseen circumstances, the Directors expect the performance of the Group for the financial year 2014 to remain profitable.