Currency exchange means Esprit profit to plunge, but it stays in the black

By

Sandra Halliday

Published
Aug 25, 2022

Esprit has issued a profit warning with its earnings for the latest half set to plummet year on year. But the recovering company will manage to stay out of the red.

The Hong Kong-listed business said the six months to June 30 is expected to result in an unaudited profit attributable to the shareholders of the company of approximately HK$13 million (US$1.66 million). That compares to HK$121 million for the same six months a year ago. 

Despite the profits tumble, it will be the second consecutive profitable half-year since the financial year that ended in June 2017 (the company has since shifted its reporting dates so late June is now the end of H1 rather than the full year). 

The group also expects total revenue of around HK$3.626 billion, compared to HK$3.872 billion a year earlier, a fall of around 6%.

The drop was primarily due to the depreciation of the euro against the Hong Kong dollar and without the adverse currency effect, revenue would have been around HK$3.934 billion, up 2% year on year.

Currency issues also added to the profits problems rather than the fall being only down to lower revenue. Increased costs mainly included a foreign exchange translation loss of approximately HK$99 million for the period as compared to foreign exchange translation gain of HK$87 million 12 months earlier. 

Esprit said that for the rest of the financial year it will continue to focus on initiatives to drive sales, enhance operational efficiency, improve inventory and receivable management, and more.

It will report its results in full next week.