Company expects an improvement in operating results next year

 

COST cuts helped narrow losses in its latest half-year results, but macroeconomic challenges cast a pall on the full-year showing of the electronics maker.

 

For the second half ended Jun 30, Creative posted a US$6.1 million net loss, an improvement from the year-ago loss of US$12.2 million. This was thanks to a restructuring exercise in December 2022 that slashed costs.

 

Total expenses for H2 fell 22 per cent to US$14.3 million, with research and development costs in particular down 32 per cent. Meanwhile, the company&rsquo s net sales for the half year inched up 3 per cent to US$28 million.

 

&ldquo Following the restructuring exercise, the group is much leaner with a lower operating cost structure to weather the challenges and adverse external impacts to its business environment,&rdquo Creative said in its earnings statement on Friday (Aug 18).

 

On a full-year basis, however, Creative&rsquo s net loss stood at US$16.7 million, wider than the year-ago US$11 million loss. This comes as net sales for the full year fell 8 per cent to US$56.2 million.

 

The spike in energy costs amid the Russia-Ukraine war, as well as high inflation, impacted sales for the whole of FY2023, Creative said. Asia-Pacific net sales, in particular, fell 18 per cent, while those of the Americas and Europe inched down marginally.

 

The FY2023 loss also includes US$3 million in employee severance payments for the restructuring exercise.

 

Better days ahead

Looking ahead, Creative is &ldquo cautiously optimistic&rdquo for FY2024, with new products providing potential revenue growth opportunities. For H1 FY2024 and the full year, it expects higher revenue and an improvement in operating results.

 

The company acknowledged that the market for its products remains challenging, amid continuing geopolitical tensions, the Russia-Ukraine war, high business costs and weak market sentiment.

 

But it noted that the board and management continue to work on &ldquo setting new strategic directions and developing new capabilities for the group, while remaining focused on its core strengths to work towards profitability and sustainable growth of the business&rdquo .

 

Creative had US$56.3 million in cash as at Jun 30 and US$3.2 million in borrowings. Its shares ended Friday at S$1.17, down S$0.06 or 4.9 per cent.