LSK Posted Stellar PBT Growth of 75.9% YoY

The mattress manufacturer in Malaysia posted a revenue of RM31.39 million for the second quarter ended 30 June 2022 (Q2FY22), which represented an increase of 19.1% from the RM26.36 million recorded for the corresponding quarter of the preceding year (Q2FY21).

LSK registered robust earnings, with profit before tax (PBT) for the quarter under review increasing by 75.9% to RM3.71 million from RM2.11 million in the previous year corresponding quarter, while profit after tax (PAT) increased by 73.6% to RM3.18 million from RM1.80 million.

“Our encouraging performance was mainly attributable to the favourable market conditions in Malaysia, which helped drive domestic sales, amid a challenging export environment. We saw broad-base improvement in various sales channels domestically, while export division continued to see challenges due to high freight cost,” Dato’ Eric Lee Kong Sim, Managing Director of LSK said.

For the six-month ended 30 June 2022 (6MFY22), the Company’s revenue increased by 17.7% to RM61.96 million from RM52.63 million in 6MFY21. Correspondingly, the Company’s PBT rose by 40.9% to RM8.10 million from RM5.75 million in 6MFY21.

Meanwhile, Lee said the Company is actively taking steps to mechanise and automate its operations to mitigate the impact of rising minimum wage and increase productivity andcefficiencies to sustain earnings growth.

“The implementation of minimum wages since May 2022 had resulted in higher staff cost for us. The imposition of the revised minimum wages to RM1,500 would cost extra operation cost to the Group. In addition, we continued to see fluctuations in the prices of centrifuged latex, which is the raw material for our operations,” he added.

“In Q2FY22, the average latex price was higher by approximately 19% compared to Q1FY22. Therefore, we are taking proactive measures to improve cost efficiency, even though we are well-positioned at the premium bedding segment to absorb or pass on the cost increase,” he stressed.

Lee remained cautiously optimistic of the Company’s prospects for the remainder part of the current financial year.

“The Cuckoo Napure mattress collaboration is expected to be a strong growth pillar for the Group. Any increase in sales under this collaboration is expected to bring in significant income for the group in the following 3 to 5 years. With increased sales, the Group is expected to channel substantial working capital to finance this which would put our excess cash in hand into profitable use,” he said.

“In the immediate term, we will continue to monitor the risk of the resurgence of COVID-19 cases or other potential pandemic that might result in lockdowns of operations by the Government,” he added.

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