SINGAPORE (July 12): Duty Free International (DFI), the multi-channel duty free and duty paid retail group in Malaysia with over 40 outlets, has announced earnings of RM15.1 million ($4.8 million) for 1Q18 ended May 31, representing a 24.1% decline from the RM19.8 million posted in 1Q17 a year ago.

Revenue for 1Q18 fell 13.1% to RM167.5 million from RM192.6 million in 1Q17, largely due to lower demand from customers for certain products as well as the imposition of Goods and Services Tax (GST) at the border outlets and duty free zones with effect from Jan 1 this year.

Correspondingly, DFI reported a profit before income tax of RM22.0 million for 1Q18. This was 12.5% lower compared to RM25.1 milion for 1Q17. Affecting the profit before income tax was a net loss in foreign exchange of RM6.0 million in 1Q2018 compared to a net foreign exchange gain of RM1.4 million in 1Q2017. However, a decrease in transportation cost of RM1.4 milion and a recognition of gain from changes in fair value of option of RM6.0 million partially offset the negative effects.

The group’s inventories further decreased from RM200 million as at Feb 28 to RM173.8 million as at end May. This was in line with the group’s efforts to manage its working capital more efficiently. Net assets increased to RM608.6 million as at May 31 compared to RM552.3 million as at Feb 28, largely due to a significant decrease in total liabilities of RM71.1 million. This was part of the efforts to continuously strengthen the balance sheet of the group.

In its outlook, DFI says the business environment which it operates in is expected to remain challenging given the current economic environments with a volatile Malaysian ringgit against the US dollar, rise of inflationary cost and weak consumers’ purchasing sentiment.

The group says it will continue its efforts to identify new market opportunities and strategies to further strengthen its operational efficiency, together with close monitoring of the key cost drivers, in order to stay competitive and profitable in the remaining quarters of the financial year.

Shares of DFI closed flat at 33 cents on Wednesday.