LONDON (Alliance News) - Jiasen International Holdings Ltd Wednesday reported a drop in profit in the first quarter of 2015, as revenue declined and it was hit by reduced gross profit margins.
Shares in Jiasen were down 11% at 16.75 pence early Wednesday, following the release of its statement.
The Chinese home products company said net profit in the three months to March 31 decreased to CNY34 million, from CNY52.5 million in the same period in 2014, as revenue fell 1% to CNY190 million from CNY191 million and it was hit by lower gross profit margins.
Sales in the Doors business and Wall Panels business fell 41% and 44%, respectively, while revenue in the Furniture & Fixtures Business grew 31%.
Gross profit margin reduced to 28.4% from 42.7% which Jiasen said was partly due to the increase in the average cost of materials, and its competitive pricing strategy which was implemented in mid-2014 to "secure larger and more luxurious property projects to ensure a predictable and visible revenue stream moving forward".
It added that short-term contracts on export shipments also accounted for lower margins, and that it expects full-year gross profit margins to be between 27% and 30%.
Jiasen said it will pay a final dividend of 2.35 pence.
The company added that it secured five new contracts with repeat customers in the quarter, valued between CNY12 million to CNY109 million, and said it is seeking strategic alliances with foreign and local brands.
"The business is trading in line with expectations, supported by a strong order book, and demand for semi-furnished apartments which is a relatively new concept in China continues unabated, driven by home owners desiring higher quality fixtures and fittings and convenience. We remain confident of the future and our major shareholders remain supportive of the business," Chairman Weigang Chen said in a statement.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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