(December 21, 2005 - Hong Kong) - Ngai Lik Industrial Holdings Limited ("Ngai Lik" or "the Group"; stock code: 332), a leading player in the electronics manufacturing services industry, announced its interim results for the six months ended September 30, 2005.
During the period under review, the Group recorded a turnover of HK$1,561 million as compared with HK$2,008 million in the corresponding period last year, representing an decrease of 22%. Net Profit attributable to shareholders recorded a decrease from HK$54 million to HK$25 million, a decrease of 53% from the previous year. The Board of Directors recommended the payment of an interim dividend of 1.5HK cents.
Commenting on the Group's performance, Mr. Lam Man Chan, Chairman of Ngai Lik, said, "During the period under review, the Group's performance was significantly affected by the high oil price and raw material prices, the increase in market interest rate, as well as the appreciation of Renminbi. Although the labour shortage and escalation of wages in Southern China continue to add pressure on the Group's performance, the Group has taken stringent cost control measures during the period with an aim of reducing operating costs and overheads. In view of the challenges, we try to enhance our gross margin by shifting our product mix from conventional audio products to digital products with higher value."
In line with its strategy to shift its product mix, the Group has actively promoted its higher value digital products to its customers. The sales of home audio products decreased by 26%, but still accounted for 88% of the total sales. The sales of digital products increased by 26% and accounted for about 12% of the total sales.
During the period, America remained the Group's largest market followed by Europe. Sales from America and Europe reached HK$1,214 million and HK$220 million, accounting for 78% and 14% of the Group's total turnover respectively.
Thanks to the Group's well-developed production platforms in Qingyuan and Dongguan, Ngai Lik continues to place its focus on low-cost manufacturing of a wide variety of quality consumer electronic products for the mass market. Currently, the Group operates around 70 production lines in China.
With the continual trend of digitalization of consumer audio-visual products, the Group will proactively enhance its product mix on an on-going basis. To cater for customer demand, various optional features are offered for the flash based MP3 and WMA players, including card slot, radio receiving and voice recording. Furthermore, the Group continues to expand its product range in portable DVD players in different screen size. Customer response towards these new products is encouraging. The Group is confident that sales orders for these products will have a satisfactory growth in the coming financial year and expects that the sales of such digital products will account for not less than 15% of sales revenue in FY2007. Furthermore, the Group will launch another series of digital products such as LCD TVs in different sizes, DVD recorders, personal media players and digital boomboxes.
In view of the labour shortage problem, the Group is also in the process of renewing and upgrading certain factory dormitories in Dongguan to provide a better working and living environment to workers. The Group will also negotiate with its customers to spread out their orders in a more even manner during the coming year to avoid order backlog during the peak season from July to October.
Looking ahead, Mr. Lam is confident of overcoming the challenges ahead. He concluded, "Although it is anticipated that market conditions will remain difficult for the second half of the financial year, the Group will continue to strive for the best results by consolidating our operations and reducing the capital expenditure to improve free cash flow. The Group is also committed to enhancing productivity and product quality through automated production facilities in its production processes. The Group will also continue to explore business opportunities with new clients through the diversification of new product range and strives to achieve a proactive yet prudent product transition for the Group. By leveraging on its solid foundation and establishment in the industry as well as the long-term relationship with its customers, the Group is committed to consolidating our leading market position in traditional audio products, expanding our product portfolio with new digital products for generating impressive returns to our shareholders and customers. "
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Company's Background
Ngai Lik is principally engaged in the manufacture and sales of a wide variety of home audio, digital and multimedia products mainly sold to the US and Europe. The Group has about 50 production lines in its first production plant located in Dongguan, and about 20 production lines at the Group's second production plant in Qingyuan. The Group has been listed on the Stock Exchange of Hong Kong Limited since 1992.
For further information, please contact:
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