Yue Yuen Industrial Ltd. said the company expects to record a decrease of around 20 percent to 25 percent in profit for the three months ended March 31.

Based on the information currently available, Yue Yuen said the aforesaid decrease in profit for the period is mainly attributable to various factors, including the following:

  1. A non-recurring profit totaling US$19.2 million was recognized in the first three-month period in 2017, which included approximately US$9.4 million of gain due to fair value changes on derivative financial instruments and US$9.8 million of gain on disposal of associates. The Board expects such non-recurring gain to materially reduce during the period.
  2. Increase in finance costs by approximately US$8.6 million during the period as compared to the same period in 2017, attributable from increased borrowing to improve the group’s capital structure.
  3. Manufacturing revenue during the period decreased by around 6.7 percent due to unfavorable fluctuations in customer orders, together with unfavorable product mix which resulted in operating deleveraging effects. These negatively impacted gross profit margin for the manufacturing business.
  4. During the period, the group’s selling and distribution expenses as a percentage to overall revenue increased when compared to the same period of last year, alongside with the growth of revenue contribution from retail and distribution business.

Details of the financial information of the group will be disclosed in the quarterly results announcement of the company to be published on May 14.