IDT posts $263.4m loss on price cuts
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IDT International, a consumer electronics product distributor, has dived to a $263.4 million loss in the fiscal year to March from a $129.6 million profit a year ago, hurt by lower selling prices and higher costs.
Turnover slumped 18 per cent to $2.37 billion from $2.89 billion a year earlier. It skipped paying final dividends to shareholders, who received five cents a share in the previous year.
IDT said it cut prices to clear inventories in Europe where it has to comply with a new rule. The rule, which takes effect on July 1, restricts the use of certain hazardous substances in electrical and electronic equipment.
'If you see the sales figures, the quantity doesn't change much, but the revenue declines because products are sold at lower prices,' said group financial controller Alfred Shao.
The firm had also been clearing inventory of MP3 and digital camera products in other markets, as it aimed to exit from the low-margin and price-competitive digital media products, Mr Shao said.
The repositioning of its digital media and telecommunications division had resulted in a 37 per cent decline in original design manufacturer and original equipment manufacturer sales, the company said.
The expansion of its sales and market teams in overseas markets also incurred higher costs.
'We have also closed some businesses and restructured some positions and departments that result in cost and expenses,' Mr Shao said. 'I can't say how good or bad the next financial year will be but we are expecting a recovery,' he said, adding that the inventory clearance and restructuring process had ended.
Rising oil prices and raw material and labour costs would affect earnings, while the rising yuan could put pressure on its gross margin, IDT said.
Mr Shao said the group would reduce its short-term loans amid rising interest rate.