KUALA LUMPUR: ELK-Desa Resources Bhd recorded a higher net profit for the first quarter ended June 30, 2022 (Q1) at RM17.59 million, up 254.2 per cent year-on-year (YoY) from RM4.97 million in the same period last year.
Revenue was up by 24.2 per cent YoY to RM39 million from RM31.37 million last year due to higher contributions for both its hire purchase and furniture segments.
The company's hire purchase receivables as of June 30 stood at RM502.19 million, slightly lower by one per cent against last year's RM508.87 million.
Bank borrowings also decreased by 11 per cent to RM151.35 million compared to RM169.11 million a year ago, mainly due to repayment of block discounting facilities and term loans.
There was no outstanding balance on the company's medium-term notes as they were fully redeemed in the last financial year.
For the hire purchase segment, revenue increased by seven per cent to RM24.52 million from RM22.88 million last year, reflecting an expansion in the portfolio.
Executive director and chief financial officer Teoh Seng Hee said the company is pleased to have started its 2023 financial year on a strong note.
"Our positive performance was due to the better-than-expected decrease in non-performing accounts and outstanding collection trends.
"While the normalisation of the national economy facilitates this following the disruptions caused by the global health pandemic, we do not foresee such reversal of impairment to continue in the current year as uncertainties persist within our operating environment," he said.
The net impaired loan ratio decreased from 2.89 per cent on March 31 to 1.83 per cent on June 30.
The company noted there was also a reversal of credit loss charge of 0.98 per cent compared to a credit loss charge of 1.43 per cent in the corresponding period of the last financial period.
As a result, profit before tax rose by 211 per cent to RM22 million from RM7.06 million a year ago.
For the company's furniture segment, revenue increased by 70 per cent to RM14.44 million, while pre-tax profit was recorded at RM1.38 million against a loss of RM0.15 million a year ago.
The improved performance of this segment was mainly due to higher sales in the quarter compared to disrupted sales from the Movement Control Order that occurred in the corresponding quarter last year.
"Moving forward, the domestic economy is expected to remain on a recovery trend, supported by the continued expansion in global demand and higher private sector expenditure given improving labour market conditions and ongoing policy support.
"ELK-Desa intends to leverage on this recovery phase to gradually bring its hire purchase receivables portfolio towards pre-pandemic levels while still taking a cautious approach to protect our asset quality through robust credit recovery efforts," Teoh said.