Bangkok--15 May--Minor International PCL
Minor Corporation's (Minor) total revenues decreased by 1% in 1Q07 to Baht 860 million despite a weak retail business environment caused by continued declines in consumer confidence and several bombs/explosions as some of Bangkok's shopping centers. Net profit declined by 26% as margins narrowed due to aggressive pricing and promotional campaigns which were required to manage inventory levels and remain competitive. YoY net profit was also down in 1Q07 as Minor booked Bt23m less in investment gains and profit from aircraft sales. An 8% YoY decrease in sales from the lifestyle brands distribution business was offset by higher contract manufacturing sales and equity profits from an investment in Minor International (MINT). Minor currently holds 19.1% of MINT which has equity accounted for this investment since 3Q05.
Minor's lifestyle brand sales and distribution business, which accounted for 42% of total 1Q07 sales showed an 8% decrease in revenues to Baht 321 million. Net operating profit decreased significantly as aggressive pricing and promotional campaigns were required due to the unfavourable business environment. Sales from fashion decreased by 10% to Baht 266 million mainly due Esprit and Bossini and recently introduced brands such as Timberland and Charles & Keith. Sales from the cosmetics business, which includes brands such as Red Earth, Bloom, Laneige and Elemis, was unchanged from the last year at Baht 56 million.
Minor's contract manufacturing business, which accounted for 51% of total 1Q07 sales, achieved a 20% YoY increase in sales and a 21% YoY increase in net operating profit. Minor's factory, which began operating in 4Q04 and was built to accommodate new customers and support higher production volumes, continued to secure new customers and operate at higher production capacities.
In 1Q07, Minor's equity accounted share of profit from MINT increased by 6% YoY. MINT's 1Q07 net profit increased by 7% YoY to 450 million. Having increased its stake in MINT from 4.3% to 19.1% since 3Q05 by acquiring shares at Baht 4.0 per share, Minor's investment in MINT has performed well with MINT's share price increasing by 210% since the acquisition to Baht 12.40 per share as of May 11. The market value of Minor's stake in MINT is worth Baht 6.9 billion.
Minor Corporation (Minor) is a leading distributor of international lifestyle brands in Thailand focusing primarily on fashion, cosmetics and education. Its brands include Esprit, Red Earth, Bossini, Timberland, Charles & Keith, Bloom, Laneige, Elemis, Tumi, Henckels, Time Life, and World Book. It owns and operates one of Thailand's leading contract manufacturers and maintains an investment portfolio of listed and private securities including a 19.1% stake in Minor International. For more information on Minor, please visit www.minornet.com