SINGAPORE (July 11): Duty Free International (DFI) saw its earnings fall 20.7% to RM7.2 million ($2.4 million) for the 1Q20 ended May, compared to earnings of RM9.0 million in the corresponding quarter last year.

Earnings per share (EPS) fell to 0.60 sen for 1Q20, compared to 0.74 sen in 1Q19.

The decline was led by a surge in losses from change in inventories, which comprises the difference in the value of inventories at the beginning and at the end of the financial period reported on.

In 1Q20, the value of the closing inventories was lower than the value of the opening inventories by RM29.8 million, compared to just RM2.5 million lower a year ago. This was mainly due to timing differences in purchases and consumption of inventories in the respective quarters.

1Q20 revenue grew 15.5% to RM135.6 million, from RM117.4 million a year ago.

The increase was largely attributable to its new acquisition of Brand Connect Group, coupled with higher demand for certain duty free merchandise.

Employee benefits expenses rose 19% to RM10.0 million in 1Q20, from RM8.4 million a year ago.

This was mainly due to consolidation of headcounts from the newly acquired Brand Connect Group as well as higher commission paid to employees in tandem with the higher revenue achieved in 1Q20.

As at end May, cash and cash equivalents stood at RM273.3 million.

DFI did not declare any dividends for the quarter, compared to an interim dividend of 0.8 cents per share declared in the corresponding period last year.

Moving forward, the group says it expects business performance to remain soft and challenging amid the present economic outlook and increasingly competitive environment.

DFI says it has approximately $37.5 million in unutilized net proceeds from some $43.6 million raised from five placement exercises completed between March 2016 and March 2017.

The group adds that it plans to allocate 90% of these funds towards general corporate requirements, including but not limited to acquisition and funding of potential business opportunities.

The remaining 10% will be used for general working capital, including but not limited to renovation and upgrading of business outlets.

Share prices at DFI closed flat at 18.2 cents on Thursday.