Johnson Electric warns of 56-62% profit plunge on forex, costs
Johnson Electric warns its interim profit will fall 56-62 per cent on a year earlier. It blames forex losses, pricing pressure, rising input costs and inflation, partly offset by favourable tax and provision changes.
Johnson Electric issued a profit warning on 9 October, forecasting its interim net profit for the six months to end-September would be between US$50 million and US$58 million, a drop of 56 to 62 per cent from the same period last year.
The group said its sales and costs are denominated in multiple currencies, exposing it to foreign-exchange risk. Forex-related impacts had reduced first-half profit by about US$49 million to US$55 million year on year. It added that, unlike the prior-year period, which recorded substantial forex gains, the current first half had booked no equivalent gains.
Several operational and market factors also drove the earnings decline, including pricing measures adopted in response to the competitive environment, provisions for customer deductions and claims still under negotiation, rising raw-material and other input costs, and inflationary pressure on labour and other operating costs. However, favourable movements in other income, provisions and taxes partly offset these effects.