Creative Tech sinks into 1Q losses in absence of patent settlement gains

Creative Tech sinks into 1Q losses in absence of patent settlement gains

By: 
Michelle Zhu
31/10/18, 11:15 am

SINGAPORE (Oct 31): Creative Technology reported a loss of US$6.1 million ($8.5 million) for the 1Q ended Sept (1Q19), reversing into the red from its earnings of US$22.8 million in 1Q18 in the absence of other gains recorded in the latter period.

While Creative booked other gains of US$32 million in 1Q18 largely due to a US$31.2 million received from the settlement of patent lawsuits as well as US$0.6 mil in foreign exchange gains, these contributions were absent from the latest quarter.

Sales for 1Q19 fell 18% to US$13.2 million from US$16.1 million previously, resulting in lower gross profit.

The group attributes the decline to uncertainty and difficult market conditions over the period under review, which in turn affected the sales of Creative products.

Cash and cash equivalents – held mainly in USD with the balance being a mix of SGD, euro, British pound and Japanese yen – fell to US$107.7 million as at end-Sept from restated cash and cash equivalents of US$114.8 million as at end-June.

This was largely because exchange differences in 1Q19 were not material compared to appreciation of these currencies against the USD in the previous year.

In its outlook, Creative says it expects no significant change in market conditions going forward, and anticipates challenging market conditions for its products.

While shipment of Creative’s new Super X-Fi (SXFI) products commenced in the beginning of 1Q19 for the Singapore market, with shipments for the US market expected to commence towards end-1Q, revenue contributions are not expected to be significant to the overall revenue for the group.

Shares in Creative surged 12.5% to close at $6.08 on Monday after firm announced it will start selling its Super X-Fi (SXFI) products in the US this week.  It will cost US$149.99 on the American market, compared with $219 in Singapore.

As at 11:02am, shares in Creative Tech are trading 3 cents higher at $6.10.

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