by AZALEA AZUAR / pic TMR FILE

ELK-Desa Resources Bhd’s net profit for the quarter ended June 30, 2022 (1Q22), increased by 254.2% to RM17.59 million from RM4.97 million in 1Q21.

At the same time, the group’s revenue also rose 24% to RM38.96 million from RM31.37 million in 1Q21 while profit before tax increased by 238% to RM23.37 million in 1Q22.

These were contributed by the company’s hire purchase and furniture segments.

“Hire purchase receivables as at June 30, 2022, stood at RM502 million, which is marginally 1% lower than the previous year.

“The group’s bank borrowings decreased by 11% mainly due to repayment of block discounting facilities and term loans,” it said in a Bursa filing yesterday.

ELK-Desa Resources’ furniture segment grew 70% to RM14.44 million from higher furniture sales in 1Q22 compared to the Movement Control Order disruptions to the furniture operations in 1Q21.

On the other hand, the impairment allowance rose by 4% to RM0.10 million as a result of repayment from furniture dealers while other expenses increased by 46% to RM3.5 million which was contributed by higher staff costs and other operating costs.

The higher sales in 1Q22 for this segment raised its profit before tax to RM1.38 million.

Moreover, revenue in the group’s hire purchase segment rose by 7% to RM24.52 million, mainly due to an increase in the hire purchase portfolio.

“For the quarter, there was a reversal of impairment allowance amounting to RM5.36 million compared to an impairment allowance of RM8.22 million in the corresponding period of the last financial period. 

“The reversal of impairment allowance was due to a significant decrease in the non-performing accounts during the quarter as a result of positive recovery activities and exceptionally good collection trend.”

The segment’s impaired loans ratio dropped from 2.89% on March 31 to 1.83% on June 30 this year, while there was a reversal of the credit loss charge of 0.98% in 1Q22 compared to a credit loss charge of 1.43% in 1Q21.

With higher staff costs and operating costs, ELK-Desa Resources’ other expenses also increased by 25% to RM6.18 million while finance costs reduced by 44% to RM1.63 million due to lower borrowings.

“The profit before tax increased by 211% to RM22 million mainly due to the lower impairment allowance and borrowing costs during the quarter.”