Hour Glass Ltd’s Latest Earnings: Sales is Up, But Profit is Not

Yesterday, Hour Glass Ltd (SGX: AGS) reported in its first-quarter earnings for the fiscal year ending 31 March 2018 (FY2018). The reporting period was from 1 April 2017 to 30 June 2017.

Hour Glass is in the business of selling luxury watches. Its has a network over 40 stores in Singapore, Malaysia, Thailand, Japan, Hong Kong, Australia and more. You can read more about Hour Glass here and here or catch up with the previous quarter’s earnings here.

Financial highlights

Here’s a quick rundown on the financial figures for the fiscal first-quarter:

1. Revenue was $165.9 million, up 11% compared to a year ago.

2. Profit attributable to shareholders was down 15% year on year to $6.9 million.

3. Earnings per share (EPS) saw 22.4% decline from 1.16 cents in FY2017’s first-quarter to 0.99 cents in the reporting quarter.

4. Cash flow from operations was negative $12.4 million with capital expenditure at $0.52 million. The luxury watch purveyor generated negative free cash flow of $12.9 million.   

5. As of 30 June 2017, Hour Glass had $112.2 million in cash and equivalents and borrowings of about $52.2 million. A year ago, it had $80.7 million in cash and equivalents and borrowings of about $64 million.

In all, Hour Glass’s sales showed solid growth but profits declined. The firm also reported negative free cash flow but maintained a net cash position on its balance sheet.

Operational Highlights

Hour Glass benefitted from an improved consumer sentiment in some of its regional markets. It gave the following outlook:

“The global watch sector continues to remain challenging. Barring any unforeseen circumstances, the Group expects to be profitable for the financial year.”

Foolish take away

At its closing price of $0.64 yesterday, Hour Glass traded at 9.5 times earnings with 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.