27-06-2025
- Business
- New Straits Times
Poh Huat earnings under pressure amid cost surge, tariffs
KUALA LUMPUR: Furniture manufacturer Poh Huat Resources Holdings Bhd is likely to see softer near-term earnings, weighed down by persistent inflation, rising operating costs, and the appreciation of the ringgit, according to Public Investment Bank Bhd (PublicInvest).
The company's key export market, the United States, has seen buyers take a cautious stance after having front-loaded orders in anticipation of higher tariffs.
"This is worsened by the fact that customers are now adopting a wait-and-see strategy after they had front-loaded orders ahead of higher tariff implementation.
"On a positive note, a slight rebound in office furniture orders is expected next quarter, as some customers have confirmed orders and are expediting their shipments within the 90-day tariff grace period," it said.
PublicInvest has also revised Poh Huat's financial year 2025 to 2027 (FY25-FY27) earnings forecast downwards by approximately 20-50 per cent.
It said this is to factor in the persistent inflationary pressures, rising operational costs and global trade uncertainties stemming from the imposition of import tariffs by the US.
The firm has maintained an "Underperform" call on Poh Huat, with a lower target price of RM0.90 from RM1.16 previously.
Poh Huat's headline net profit for the second quarter (2Q) of FY25 declined by 92.0 per cent year-on-year (YoY) to RM0.6 million.
The sharp decline was attributed to lower orders and shipments of office furniture from its Malaysian operations, higher material and labour costs, and a decline in net other income due to a foreign exchange loss of RM1.9 million, compared to a gain of RM2.3 million in the same quarter last year.
Excluding non-operating items, Poh Huat's first half (1H) of FY25 core net profit of RM10.9 million came in below PublicInvest's and consensus estimates at 28.7 per cent and 32.8 per cent of full-year forecasts, respectively.
"The discrepancy in our forecast was mainly due to the lower-than-expected contribution and higher operating costs from the Malaysian operations," PublicInvest noted.
The group's revenue also declined to RM98.3 million in 2Q25, mainly due to reduced office furniture shipments from Malaysia, as customers had front-loaded orders ahead of the second presidency of Donald Trump and anticipated trade barriers.
Its home furniture shipments from Vietnam also remained weak, with some US customers holding back orders in April 2025 due to new import tariffs.
Nevertheless, Poh Huat had declared a second interim dividend of two sen for the financial period.
