GP batteries announces interim results

China: GP batteries announces interim results

China: GP Batteries Announces Interim Results

GP Batteries’ turnover for the six months ended September 30, 1999, rose by 9.2% to S$256.2 million and the consolidated net profit after taxation and minority interests decreased by 49.3% to S$8.7 million when compared to the previous corresponding period. Earnings per share amounted to 8.44 Singapore cents.

The improvement in turnover was due mainly to GP Batteries’ success in increasing its share in major markets despite strong competition. In particular, sales to the U.S. and European markets increased by 32.6% and 13% respectively. An abnormal rise in material costs, especially nickel; volatility in foreign exchange rates, especially the Japanese yen; and high interest rates in its operating currencies had a significant impact on net profit.

In 1999, a year of natural disasters, one of its major factories in China was severely flooded during a rainstorm. However, the asset losses were mostly covered by insurance. The earthquake in Taiwan caused only minimal damage to its factory, but the resultant power supply interruption has caused some delay in the trial production of lithium-ion batteries.

To capitalize on the economic recovery in Thailand, a new sales office was set up and became operational in October. The “GP” brand was awarded the “Hong Kong Top Ten Brandnames” by the Chinese Manufacturers’ Association of Hong Kong in December. This reaffirms “GP” brand’s leading position in the region.

The electric vehicle batteries for electric cars and scooters have continued to receive encouraging response. GP Batteries is actively co-operating with manufacturers in Italy and Taiwan, and has increased the size of its pilot line to cope with demand.

GP Batteries is cautiously optimistic about the battery market for the remaining period of its fiscal year. With the economic recovery, the general business outlook is now more positive. The rechargeable battery market is expected to improve gradually as the market consolidates with the exit of some players. OEM demand for its batteries is expected to remain strong. As the selling price of batteries has gradually stabilized, there would be better opportunities to improve margins. GP Batteries’ established position in nickel metal hydride and lithium-ion batteries would enable it to participate in the highest growth segment of the global battery market.

GP Batteries also will continue to rationalize operations to further reduce costs. It will continue to expand and strengthen its distribution in Asia and to enhance the “GP” brand, preparing for the recovery of the Asian economy.

Barring unforeseen circumstances, the directors of GP Batteries expect its second half year performance to be satisfactory relative to the first half year.

GP Batteries is the Hong Kong-based, Singaporelisted Battery Division of Gold Peak Industries.

Copyright Seven Mountains Scientific, Inc. Feb 2000

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