ICT reseller 1 Utopia's first half losses widen

• Says lower revenue in Q2 due to poor sales of notebooks and smartphones
• Expects Malaysian retail sector to continue to be challenging in 2014

1 UTOPIA Bhd, a reseller of ICT products as well as a hydraulic solutions provider, recorded a net loss of RM1.7 million in its fiscal second quarter, partly due to the lacklustre performance of its ICT business.
 
For the second quarter ended May 31, 2014, revenue fell 5.6% to RM119.45 million, the decline mainly due to lower revenue recorded for sales of notebooks and smartphones.
 
For the fiscal first half, the company saw its net loss widen to RM1.92 million, against an RM915,000 net loss in the same period a year ago. Revenue rose 3% to RM247.69 million during the period.

[RM1 = US$0.31]
 
“The decrease was mainly due to the lower margin derived from the ICT business,” 1 Utopia said in its filing to Bursa Malaysia on July 24.
 
1 Utopia, which entered the ICT industry via its wholly-owned unit ICT Utopia Sdn Bhd, has expanded its ICT division with the acquisition of PC3 Technology Sdn Bhd, Essential Action, PDA Expert Mobility Sdn Bhd, Urusrasa Sdn Bhd, and Prestige Atoz Sdn Bhd.
 
PC3 Technology is an authorised reseller for Acer, Toshiba and Asus notebooks, ZTE tablets, desktop PCs, Acer projectors, Canon printers, as well as Microsoft software.

PDA Expert is an authorised reseller of telecommunications products such as mobile phones, smartphones and accessories; while Essential Action is an authorised reseller of Lenovo notebooks and desktop monitors, as well as an authorised operator for U Mobile at Plaza Low Yat in Kuala Lumpur.
 
1 Utopia's financial performance was pretty much in line with what industry experts had forecast.
 
Earlier this year, IDC said it expected total PC shipments (including both desktop and portable PC) in emerging markets to fall by 7.8% while mature markets were expected to shrink by 4%.

This week however, the market research and analyst firm said that its preliminary results showed that the Asia Pacific (excluding Japan) PC market increased 2% from last quarter and declined 10% year-on-year in the second quarter of 2014, to reach 24.3 million units. This was marginally higher than its initial forecasts.
 
While sales of smartphones are still expected to grow over the near to medium term, increasing competition in the market is expected to further erode margins.
 
“The group believes that the Malaysian retail sector will face a challenging year ahead in 2014 in view of the anticipated reduction in consumer spending,” said 1 Utopia.
 
The company’s shares traded on Bursa Malaysia have also been taking a beating this year, having fallen by 35% to 5.5 sen per share while its market capitalisation shrunk by RM29 million to just over RM54 million.
 
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