Furniture firm's losses up 15 times to $33m for full year

DOORMAKER Chuan Soon Huat Industrial Group still has not got a handle on its losses - they ballooned from $2.1 million in 2005 to $33 million for the year ended Dec 31.

This resulted in a loss per share more than double the 7.5 cent-level the stock closed at yesterday.

The firm blamed the poorer performance on lower sales to Europe and in Singapore, as well as rising costs due to defective raw material. A European customer returned six containers of its products last year as some were cracked.

The troubled company hit the headlines last November when six of its seven directors were arrested for not making timely disclosures to the Singapore Exchange. Shortly after, it revealed that three of its employees had been helping the Commercial Affairs Department since last June with a probe into share rigging.

Chuan Soon Huat reported yesterday that revenue had slumped 11 per cent to $63.6 million, while the cost of sales alone was more than $51 million. European sales slid 8 per cent, although those to the United States and China improved.

'The group's business performance was badly affected by the extraordinary event arising from defective material experienced by its Indonesia subsidiary Cemerlang Selaras Wood,' said the firm.

Its cost of sales was 'abnormally high' as material prices jumped 30 per cent while it registered 'excessive waste' due to defective wood. Chuan Soon Huat also suffered a $2.6 million foreign exchange loss due to a weakening US dollar, nearly seven times higher than the loss in 2005.

Its loss per share for the year was 15.9 cents, compared with nearly one cent the year before. Group net asset value per share fell to 3.56 cents at the end of last year, from 19.95 cents at end-2005.

No dividend was declared.

The company said it was 'facing tough operating issues' relating to its raw material problem. 'Given the current situation and challenge to restore business to normality, the group is seeking external funds and disposing of assets to provide liquidity in the immediate term, to support its business activities,' it said.

'The company is currently negotiating with a potential strategic investor for funding and discussing with creditor banks to reach a debt restructuring agreement.'

Chuan Soon Huat shares closed one cent higher at 7.5 cents yesterday.