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Hour Glass Ltd’s Latest Earnings: Revenue Goes Up 5% but Profit Declines

Yesterday, Hour Glass Ltd (SGX: AGS) reported its third quarter earnings for its fiscal year ending 31 March 2017 (FY2017). The reporting period was from 1 October 2016 to 31 December 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 the company’s previous quarter here.

Financial highlights

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

  1. Revenue for the third-quarter was $196 million, up 5% compared to the same quarter a year ago.
  2. But, profit attributable to shareholders was down 8% year-on-year to $13.6 million.
  3. Earnings per share (EPS) consequently saw a 7.7% decline from 2.06 cents in the same quarter a year ago to 1.90 cents in the reporting quarter.
  4. Cash flow from operations in the quarter was $9 million with capital expenditure coming in around $725,000. This gives the luxury watch firm positive free cash flow of $8.3 million, up from the negative $10.0 million seen a year ago.
  5. As of 31 December 2016, Hour Glass has $95.1 million in cash and equivalents and borrowings of about $55.4 million. This is an improvement from the end of the last fiscal year when the company had around $93.9 million in cash and equivalents and borrowings of about $63.4 million.

In all, Hour Glass had improved its top-line, reported positive free cash flow, and maintained a strong balance sheet with a net cash position. On the flipside, the company’s profit had declined.

Operational highlights and what lies ahead

Hour Glass’s management said that the watch industry in 2016 suffered from a contraction in global demand. The firm believes that the industry is going through a period of right-sizing in which output production will have to adjust to consumers’ needs.

Hour Glass also provided this outlook:

“The uncertainties in the global economy continue to impact consumer sentiment and discretionary spending. Barring any unforeseen circumstances, the Group expects to remain profitable for the financial year”

The company’s shares closed Thursday at $0.645 each, giving rise to a trailing price-to-earnings ratio of 9.6 and a dividend yield of 3.1%.

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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.