Friday 02 Jun 2023
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KUALA LUMPUR (Aug 18):  ELK-Desa Resources Bhd reported an 8.1% drop in net profit for its first quarter ended June 30, 2017 (1QFY18) RM5.05 million from RM5.5 million a year earlier.

In a filing with Bursa Malaysia today, the group said the drop was mainly due to a lower profit contribution from its hire purchase segment.

Hire purchase financing for used motor vehicles is one of the group’s two main business activities, the other being furniture trading.

The group’s revenue for the quarter rose 16.2% to RM25.57 million from RM21.99 million in 1QFY17, thanks to higher sales contribution from both business segments.

Revenue for its hire purchase segment grew 15% to 17.64 million, whereas that of the furniture segment rose 20% to RM7.94 million.

ELK-Desa said impairment allowance for its hire purchase segment rose 46% to RM6.45 million, primarily due to higher delinquent accounts and cost of debt recoveries.

"Generally, the higher cost of living and the current soft economic environment would have an impact on the repayability of our hirers," it added.

Similarly, the impairment allowance for its furniture segment jumped by 100% to about RM160,000 due to long outstanding trade receivables.

Moving forward, ELK-Desa said despite a cautious outlook ahead, the group is unlikely to experience any slowdown in demand for second-hand car financing in the current FY18, as the segment is still relatively small compared with the overall auto financing industry.

Besides that, the company noted that it will continue to work towards ensuring that the furniture segment remains profitable although it is still at its early development stage.

"The board is confident that the group's profit for the financial year ending 31 March 2018 will be better than financial year ended 31 March 2017," it added.

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