Financial Results Met Our Expectations Amid Macroeconomic Challenges and Climatic Factors
Strengthening Global Presence Through "Glocalization" Approach
HONG KONG, Nov. 28, 2024 /PRNewswire/ -- Computime Group Limited (the "Company" or "Computime", together with its subsidiaries, collectively the "Group"; stock code: 320.HK) is pleased to announce its interim results for the six months ended 30 September 2024 ("1H FY24/25" or the "Period").
Financial Overview
The Group reported a revenue of HK$1,811.3 million in 1H FY24/25 (The six months ended 30 September 2023 ("1H FY23/24"): HK$2,046.8 million). This decline was mainly hindered by a HK$133 million backlog in shipments within the Control Solutions segment. After adjusting for this backlog, revenue reflects a 5% year-over-year decrease, which aligns with our expectations. The Heating, Ventilation, and Air Conditioning ("HVAC") sector of Control Solutions faced challenges from climatic factors and reduced demand for new home construction, while the Branded Business struggled due to warm weather and slow construction activity.
As a result, gross profit fell to HK$282.9 million, an 8% decrease. However, the gross profit margin improved to 15.6%, driven by effective cost control and operational efficiencies. EBITDA was HK$146.5 million in 1H FY24/25, maintaining a stable EBITDA margin of 8.1%. As at 30 September 2024, cash and bank balances were HK$217.1 million, with net cash at a healthy HK$70.1 million.
Segment Review
In 2024, global economic growth has remained subdued. Geopolitical tensions, high interest rates, and various disruptions have dampened markets, particularly affecting the new home construction and residential retrofit activities in Western economies, which have also impacted us.
In the Control Solutions segment, revenue fell to HK$1,638.6 million, an 11.2% decrease from HK$1,844.4 million in the first half of FY23/24, primarily due to HK$133 million in shipment backlogs, and reduced demand in the HVAC sector offset gains in Appliances and Water and Air sectors. The Branded Business also faced challenges, with revenue dropping 14.6% to HK$172.8 million due to warmer weather and sluggish construction activity.
Despite these challenges in both segments caused by external market conditions and seasonal variations, we expect strategic initiatives and new product launches to bolster performance in the latter part of the year.
Our "Glocalization" Approach
As we expand our global footprint, we have further enhanced our presence by establishing the manufacturing facility in Romania and preparing our site in Vietnam. To effectively manage our global footprint, we utilize a "Glocalization" approach, which combines globalization and localization to better serve our customers and understand local markets. This strategy allows us to tailor our global products to meet specific regional needs.
Our "Glocalization" approach employs three operational models. The "Region-to-Region" model, with manufacturing sites in Romania, Mexico, Vietnam, and Malaysia, enhances our responsiveness to on-shoring demands in Europe and North America. Our "Hub and Spoke" structure provides centralized support for efficient resource management across regional offices. Additionally, the "Specialized and Flexible Hybrid" model enables locations to leverage their unique strengths. These strategies optimize operations, improve market reach, and enhance competitiveness in an increasingly complex global landscape.
Outlook
The macroeconomic landscape continues to present challenges, particularly in the newly built home property sector. However, residential retrofit activities have surged in 2024, driven by new energy-efficient upgrade standards in the European Union, the United Kingdom, and the United States of America, signaling promising long-term opportunities.
Mr. Bernard AUYANG, Chairman, Executive Director and Chief Executive Officer of Computime Group, commented, "Our commitment to sustainability aligns with growing consumer and regulatory demands for environmentally responsible solutions, positioning us favorably as more businesses and consumers prioritize eco-friendly practices."
He continued: "Despite current market sluggishness, our 'Glocalization' approach has fostered strong relationships with customers, enabling us to secure order volumes and initiate new projects. Our focus on innovation and sustainable solutions, along with continued investments in Research and Development and the establishment of a technology hub, will enhance our competitiveness. While macroeconomic conditions may remain challenging, our strategic emphasis on sustainability and customer relationships will drive future success."