Zindart Reports Sharp Improvement in Gross Margins and Profitability On Lower Revenues
SAN FRANCISCO--(BUSINESS WIRE)--Aug. 14, 2002--
Revenue for Q1 Fiscal 2003 $25.5M versus $28.3M a Year Ago;
Lowers Net Loss for Quarter to $0.7M versus $2.6M Last Year
Zindart Limited (NASDAQ/NM: ZNDT) today reported improved results for the quarter ending June 30, 2002, accomplished after a re-engineering of its manufacturing operations and a complete overhaul of its cost structure.
Revenues for the quarter were $25.5 million compared to $28.3 million for the prior quarter of fiscal 2002. The net loss for the quarter was reduced to $0.7 million or $0.08 per share diluted versus a loss of $2.6 million or $0.29 per share diluted for the equivalent period last year. Gross margins rose to 31 percent in the quarter, significantly higher than the 25.9 percent registered in the same quarter of fiscal 2002.
Interest Expense Down; New Banking Facilities Added
Peter Gardiner, Chairman, said the company continues to eliminate long term debt, in line with its strategic plan. As a result, interest expenses for the period were reduced by 45 percent. Also the company has expanded bank relationships to provide short-term trade finance facilities to cover receivables that will arise from anticipated revenue growth.
Hua Yang Expansion
Direct selling efforts in Europe and the United States, combined with improved operations and cost structure, have allowed Hua Yang to achieve improved revenue expansion, according to Gardiner. New contracts from a U.S. company with a top selling board game and additional packaging for perfumes of Christian Dior has resulted in improved plant utilization.
Corgi Growth in U.S. on Track
Zindart's Corgi Classics operating unit, a branded line of die-cast collectibles, already the market leader in the U.K., has continued to increase its planned penetration of the American market with revenues in the U.S. for the quarter up 100 percent over the same quarter a year ago.
"Corgi cars, trucks, fire engines and military vehicles, once sold only through small collector outlets, can now be found in high end toy merchandisers like FAO Schwarz and are beginning to gain acceptance in the mass market as well," Gardiner said. "Our strategy of introducing lines at several price points and products that appeal to American buyers is paying off. We have built considerable brand value in the biggest market in the world."
Zindart Manufacturing Experiencing Slower Recovery
With the world market still volatile, some of Zindart Manufacturing's largest very loyal customers are adopting an extremely prudent stance on the placement of forward commitments, according to Gardiner. "This has resulted in lower revenues in the quarter compared to last year, together with lower than desired plant utilization," he said. "Costs, however, are being very tightly controlled."
Aggressive sales efforts are continuing. Several new contracts with existing customers have recently been agreed upon, and the company is now responding to an active stream of invitations to bid, including opportunities from major Japanese companies. With its new cost structure in place, Zindart Manufacturing believes it will be able to achieve higher sales volume at improved margins which will profitably fill the available capacity, Gardiner said.
Company Entering 3rd Phase of Strategic Plan
Gardiner said Zindart has begun implementing the third phase of its Strategic Plan, announced at the end of fiscal 2002, during which the company plans to accelerate its transition to a global marketing organization.
"We have reorganized the marketing and sales organizations in all three units and reduced our cost structure," Gardiner said. "Each new customer and every new contract can be expected to accelerate our return to sustained profitability. Our resources, focus and energy are on delivering greater value for our shareholders." |
