Challenger announces 22% higher FY18 earnings of $19.5 mil; proposes 2-cent final dividend

SINGAPORE (Feb 15): Challenger Technologies has concluded FY18 with $19.5 million in earnings, up 22% from $16 million in FY17 due to higher gross profit and lower operating expenses.

The stronger full-year bottomline was achieved in spite of 2% decrease in 4Q18 earnings to $4.7 million from $5.8 million in 4Q17, mainly due to a higher income tax expense of $0.7 million.

Revenue in 4Q fell 6% y-o-y to $83.9 million from $89 million a year ago.

Challenger attributes the slowdown to weak retail sentiment from global economic uncertainties such as the US-China trade war and Brexit. In turn, this has led to “a tough quarter” compared to the previous corresponding period, says the group.

FY18 revenue consequently fell 1% on-year to $320.2 million from $321.9 million. The lower overall retail sales revenue was nonetheless in part by higher trade show and corporate sales revenue.

Notably, operating expenses for the full year registered a 12% decline to $4 million compared to $4.5 million in FY17.

As at end-2018, cash and cash equivalents stood at $63.2 million, unchanged from that of a year ago.

The group has proposed a final dividend of 2 cents per share for FY18.

Together with its interim dividend of 1.1 cent, this would give a total dividend of 3.1 cents per share for the full year, representing 55% of Challenger’s net profit attributable to shareholders.

Going forward, Challenger chief executive Loo Leong Thye says he expects FY18’s weak retail sentiment to continue into 2019 due to “lingering global uncertainties”.

The group nonetheless intends to continue growing its retail footprint at available and suitable locations from its current store count of 39.

“Due to premium audio’s niche nature, we do not expect Musica Boutique to turn a profit in the first six months,” says Loo, referring to Challenger’s foray into high-end audio retail with its recent opening of Musica Boutique at ION Orchard mall.

Shares in Challenger closed 0.93% lower at 53.5 cents on Friday.