Global-Tech Appliances Inc., Hong Kong, said today its net sales and earnings for the first quarter of fiscal 2006, ended June 30, 2005, has net sales of U.S. $17.7 million, up approximately 79 percent, compared to $9.9 million for the first quarter of fiscal 2005. Net loss for the first quarter of fiscal 2006 was $2.7 million, or $0.22 per share, compared to a net loss of $2.8 million, or $0.23 per share, in the prior corresponding fiscal period.
"While our sales rebounded to more normal levels, we continued to incur significant cost increases in materials, particular plastic resins, as well as a rise in labor cost," said President and CEO John C.K. Sham. "The cost of plastic resins, a key raw material in our products, has been increasing steadily since last year as they are derived from natural gas and other oil distillates. This has impacted our gross profit margins, but we hope our margins will improve as plastic resin prices begin to normalize.
"The steps which we are currently taking to reduce costs, including redirecting our display activities, did not impact the first quarter and are also not expected to affect the upcoming second quarter of fiscal 2006, though we anticipate these actions will have a gradual positive impact on our financial results in subsequent quarters," Sham added.
"We expect our net sales for the balance of fiscal 2006 to improve over the last three quarters of fiscal 2005 and plan to continue to implement actions to further reduce our fixed costs in an effort to improve our financial performance over the next few quarters," Sham continued. "In addition to obtaining relief from material cost increases, we will also need some new product introductions in our core business or new businesses in order to return to profitability."
Global-Tech is a holding company with subsidiaries manufacturing and marketing a range of consumer electrical products worldwide, including floor care products and small household appliances. These products are marketed by customers under brand names that include:
Black & Decker(R)
Global-Tech's subsidiary Global Display Limited is developing a wide range of consumer products incorporating high-definition flat panel displays (FPDs) that utilize liquid crystal display (LCD), plasma display panel (PDP), liquid crystal on silicon (LCOS), optical, and digital display technologies.
Lite Array, Inc., another of Global-Tech subsidiary, is developing and introducing display modules utilizing proprietary small molecule organic light emitting diode (OLED) technology for use in electronic devices, such as cellular phones and MP3 players.
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