GP Industries (G20) H2 2023 earnings summary

Executive summary

• FY2023 revenue fell 5.9% YoY to S$1,150.0m; profit attributable to equity holders from continuing operations declined 48.8% to S$22.0m.

• High interest rates, material and energy costs, supply instability and weaker demand weighed on results; cost controls, capacity rebalancing and new products remained priorities.

Financial highlights

• Revenue was S$1,150.046m vs S$1,222.749m restated; gross profit was S$305.992m vs S$317.265m.

• Gross margin rose to 26.6% from 25.9%; distribution costs fell 6.1% to S$145.3m and administrative expenses fell 3.0% to S$144.2m.

• Continuing-operations profit after tax was S$27.437m vs S$49.178m; attributable profit was S$22.044m vs S$43.066m restated; basic EPS was 4.56 cents vs 8.27 cents.

• Finance costs rose to S$29.264m from S$19.332m; profit before taxation was S$29.914m vs S$55.916m, including S$24.128m share of associate results vs S$54.301m.

• Interim and proposed final dividends total 2.5 cents per share vs 3.25 cents in FY2022; proposed FY2023 payout ratio was 54.8%.

Outlook and guidance

• Battery demand is expected to recover as major overseas customers replenish inventories in the latter part of FY2024; management expects improved manufacturing efficiency after capacity rebalancing.

• Higher interest rates are expected to significantly increase finance costs; equity financing may fund some expansions where appropriate to reduce borrowings.

• KEF consumer speakers, Celestion professional drivers and professional audio manufacturing are expected to continue growing; electronics component shortages may constrain inventory and working capital.

• Zhongyin (Ningbo) Battery operations are expected to relocate to the new factory complex by FY2024-end; the existing site is planned for disposal, with proceeds intended for deleveraging.