Wednesday, February 15, 2012 8:53:58 AM
Highway Holdings Limited (MM) (NASDAQ:HIHO)
Today : Wednesday 15 February 2012
Highway Holdings Limited (Nasdaq:HIHO) today reported results for its fiscal third quarter ended December 31, 2011.
Net income for the fiscal 2012 third quarter was $75,000, or $0.02 per diluted share, compared with $407,000, or $0.11 per diluted share, in the third quarter a year earlier. Net sales for the same period were $7.3 million compared with $9.0 million a year ago.
Net income for the nine-month period of fiscal 2012 was $92,000, or $0.02 per diluted share, compared with $861,000, or $0.23 per diluted share, a year earlier. Net sales for the nine months were $19.4 million compared with $23.3 million in the comparable period a year earlier.
"Results for both the last quarter and the most recent nine-month period were impacted by a continued challenging business environment, with less revenue and higher manufacturing expenses due to increased labor costs in China," said Roland Kohl, chairman, president and chief executive officer of Highway Holdings.
Kohl noted that net sales in the third quarter were impacted by a reduction in orders from two of the company's metal component customers, which represents approximately $1.0 million less compared with the same period a year earlier. The company expects to start making up for this lost business beginning in the current fiscal fourth quarter, as presently new tooling is being made for the production of new metal components for these customers.
Sales during the third quarter from the company's mobile phone case business were approximately $250,000 less than a year ago. These reductions were due to a decision by one of Highway Holdings' customers to relocate the majority of the business to another manufacturer in Mexico in order to save on transportation costs and reduce product delivery time, particularly to customers in North America.
Gross profit for the three- and nine-month periods ended December 31, 2011 decreased to 18.2 percent and 19.5 percent of net sales, respectively, compared with 19.5 percent and 20.5 percent, respectively, a year earlier. Gross profit for the nine-month period was impacted by an approximate 16 percent increase in labor costs and an 18.4 percent decrease in sales turnover compared with the same period last year. The company's operating income for the three-month period ended December 31, 2011 was $6,000 compared with $481,000 in the prior year. Operating income for the nine months was $52,000 compared with $951,000 a year earlier.
Kohl noted that labor force shortages during the past months and a high local inflation rate put further pressure on labor costs and consequently on operating margins, which could lead to even higher customer pricing. He emphasized that the company's ongoing focus on increasing operating efficiency through automation and new production methods can only partially absorb increased payroll expenses. Kohl highlighted the dramatic increase in Chinese wages -- particularly during the last two years with statutory minimum salaries in China increasing by about 67 percent and market wage rates climbing to about 100 percent due to competitive wage pressure in Shenzhen. "If the present labor shortage continues, wages may increase even further in the foreseeable future," Kohl added.
As a result of such extreme increases in labor costs, the company, therefore, is also exploring the possibility of outsourcing some of the company's very labor intensive assembly work to low-labor cost countries under its direct management.
Selling, general and administrative expenses were reduced by $108,000 for the nine-month period, but remained almost the same for the three-month period despite the lower turnover. Selling, general and administrative costs as a percentage of net sales were higher in both the three- and nine-month periods ended December 31, 2011 -- reflecting the impact of decreased sales turnover, increased staff salaries due to the inflationary situation and increased costs caused by the conversion to a wholly owned foreign enterprise (WFOE) operating structure, which is ongoing and only expected to be fully completed by the end of 2012.
Currency exchange rates positively affected the company's net income for the nine-month period ended December 31, 2011. During the nine-month period in 2011, the company reported a $78,000 currency exchange gain compared with a $69,000 exchange loss in 2010.
Kohl noted the company's balance sheet remains strong. The company's total cash and restricted cash position was $7.8 million at December 31, 2011, or $2.05 per share, after total dividend payments of $0.44 during the past 18 months. The company's current ratio was 2.68:1 at December 31, 2011. The total cash and restricted cash exceeded all current and long term liabilities combined by $1.8 million.
"The company's strategic focus is to continue our efforts to further upgrade Highway Holdings' facilities in China into a much smaller high-tech operation – utilizing automation and becoming the premier model for modern and highly efficient manufacturing in China," Kohl said.
"The company is confident, despite the loss of assembly work to lower cost labor countries, that such activities eventually will benefit our operation, because such countries usually lack a strong supplier network for mechanical components. Such a situation may in fact provide significant new business opportunities," Kohl said.
About Highway Holdings
Highway Holdings produces a wide variety of high-quality products for blue chip original equipment manufacturers -- from simple parts and components to sub-assemblies and finished products. Highway Holdings' administrative offices are located in Hong Kong and its manufacturing facilities are located in Shenzhen in the People's Republic of China.
Except for the historical information contained herein, the matters discussed in this press release are forward-looking statements which involve risks and uncertainties, including but not limited to economic, competitive, governmental, political and technological factors affecting the company's revenues, operations, markets, products and prices, and other factors discussed in the company's various filings with the Securities and Exchange Commission, including without limitation, the company's annual reports on Form 20-F.
CONTACT: Gary S. Maier
Maier & Company, Inc.
(310) 442-9852
Recent HIHO News
- Highway Holdings Declares $0.05 Cash Dividend per Share; Company Sets Dividend Record and Distribution Dates • PR Newswire (US) • 04/02/2024 12:00:00 PM
- Form SEC STAFF ACTION - SEC Staff Action: ORDER • Edgar (US Regulatory) • 02/07/2024 05:00:03 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 02/02/2024 08:59:15 PM
- Form SC 13G/A - Statement of acquisition of beneficial ownership by individuals: [Amend] • Edgar (US Regulatory) • 02/02/2024 07:55:07 PM
- HIGHWAY HOLDINGS REPORTS FISCAL 2024 THIRD QUARTER AND NINE MONTH RESULTS; THIRD QUARTER SALES INCREASE 60% YEAR OVER YEAR • PR Newswire (US) • 02/01/2024 02:30:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 12/12/2023 11:01:27 AM
- HIGHWAY HOLDINGS SIGNS NON-BINDING LETTER OF INTENT TO ACQUIRE MAJORITY OF SYNOVA METALL- UND KUNSTOFFTECHNIK GMBH • PR Newswire (US) • 12/11/2023 09:00:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 11/16/2023 07:25:37 PM
- Highway Holdings Declares $0.05 Cash Dividend per Share • PR Newswire (US) • 11/16/2023 01:00:00 PM
- HIGHWAY HOLDINGS REPORTS SECOND QUARTER FISCAL YEAR 2024 RESULTS • PR Newswire (US) • 10/23/2023 11:00:00 AM
- HIGHWAY HOLDINGS REPORTS FIRST QUARTER FISCAL 2024 RESULTS • PR Newswire (US) • 10/20/2023 08:30:00 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 08/28/2023 08:05:12 PM
- Form 20-F/A - Annual and transition report of foreign private issuers [Sections 13 or 15(d)]: [Amend] • Edgar (US Regulatory) • 08/18/2023 08:01:32 PM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 07/31/2023 06:00:31 PM
- Highway Holdings to Resume Full Production for Playmaji • PR Newswire (US) • 07/27/2023 11:00:00 AM
- Form 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16] • Edgar (US Regulatory) • 07/14/2023 05:04:51 PM
- HIGHWAY HOLDINGS REPORTS FISCAL FOURTH QUARTER AND FULL YEAR 2023 RESULTS • PR Newswire (US) • 07/13/2023 08:18:00 PM
- Form 20-F - Annual and transition report of foreign private issuers [Sections 13 or 15(d)] • Edgar (US Regulatory) • 07/13/2023 08:00:56 PM
- Highway Holdings Declares $0.10 Cash Dividend per Share • PR Newswire (US) • 05/22/2023 12:00:00 PM
NanoViricides Reports that the Phase I NV-387 Clinical Trial is Completed Successfully and Data Lock is Expected Soon • NNVC • May 2, 2024 10:07 AM
ILUS Files Form 10-K and Provides Shareholder Update • ILUS • May 2, 2024 8:52 AM
Avant Technologies Names New CEO Following Acquisition of Healthcare Technology and Data Integration Firm • AVAI • May 2, 2024 8:00 AM
Bantec Engaged in a Letter of Intent to Acquire a Small New Jersey Based Manufacturing Company • BANT • May 1, 2024 10:00 AM
Cannabix Technologies to Deliver Breath Logix Alcohol Screening Device to Australia • BLO • Apr 30, 2024 8:53 AM
Hydromer, Inc. Reports Preliminary Unaudited Financial Results for First Quarter 2024 • HYDI • Apr 29, 2024 9:10 AM