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Hour Glass Ltd’s Latest Earnings: Another Sluggish Quarter

Yesterday, Hour Glass Ltd (SGX: AGS) reported its second-quarter earnings for its fiscal year ending 31 March 2017 (FY2017). The reporting period was from 1 July 2016 to 30 September 2016.

As a quick background, Hour Glass is in the business of retailing luxury watches. It has a network of over 40 stores in Singapore, Malaysia, Thailand, Japan, Hong Kong, and Australia.

You can read more about Hour Glass in here and here. You can also catch up with the results from its previous quarter here.

Financial highlights

The following’s a quick rundown on some of the financial figures for Hour Glass:

  1. Revenue for the second-quarter was $163.1 million, down 7% compared to the same quarter a year ago.
  2. Profit attributable to shareholders was also down 14% year-on-year to $8.3 million.
  3. Earnings per share (EPS) saw a 14% decline as well, from 1.37 cents in the same quarter last year to 1.18 cents in the reporting quarter.
  4. Cash flow from operations was $29.5 million with capital expenditure clocking in around $1.8 million. This puts the luxury watch retailer in positive free cash flow territory to the tune of $27.7 million, up from the S$12.4 million seen a year ago.
  5. As of 30 September 2016, Hour Glass has $85.3 million in cash and equivalents and borrowings of about $54.8 million. This is an improvement from a year ago when the company had  $76 million in cash and equivalents and borrowings of$64.7 million.

In all, both Hour Glass’s top-line and bottom-line had declined for the quarter. On the flipside, the firm reported positive free cash flow and has a balance sheet with a net cash position.

Operational highlights

Revenue for the first-half of FY2017 was affected by downward pressure from the economic environment and weak consumer confidence. Michael Tay, Hour Glass’s managing director, said:

“Given the headwinds in the global economy and contracting market demand for discretionary goods, the Group delivered a modest set of results. While we have managed to ride through this difficult first half, we do not anticipate that the downward pressure will ease anytime soon.

The Group has ridden out multiple economic downturns. And during such times, we have sought to maximise every opportunity to develop our teams and improve our operating capabilities, emerging stronger each time. This occasion is no different.”

Hour Glass also provided this outlook in its earnings release:

“The recent passing of Thailand’s King will have an impact on the performance of the Group’s Thai associates as the country enters a prolonged period of mourning, curtailing luxury consumption. Looking ahead, The Hour Glass continues to observe that current market conditions are likely to remain challenging.”

At its closing share price of $0.66 on Thursday, Hour Glass traded at 9.6 times trailing earnings and has a trailing dividend yield of 3%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.