(16-05-2012, 04:37 AM)dydx Wrote: I have 2 points on the 1Q results:
1) GP has fallen (-36.7%) much too fast with Turnover (-7.1%)! There could be some basic weaknesses in the business. As this is on a group basis, it does indicate the management did not do much or enough to shift the reduced production business volume around to balance things up in order to keep overall efficiency higher.
2) If we take out the $2733k net fair value adjustment gain for derivative contracts, and the $2269k from insurance claims, 1Q's PBT would have come to only $1178k! This is very small when compared to a group revenue of $52.3m!
First of all, I have to admit that Armstrong is far from full recovery from the Thai flood yet.
The statement of "Armstrong is on track in its recovery path" is to match the progress with my expectation
I am expecting Armstrong full recovery toward end of FY2012.
Let's back track on dydx concerns. I am not part of the management team, so all below is IMO as a shareholder.
IMO, the increase in COGS does not conclude that in-efficiency in balancing of the production. Two (2) factories out of Four (4) been affected in Thailand flood, and full recovery in still on-going. The factory overhead of the two (2) factories continue to be incurred, even production been shifted to other factories. On top of that, not full capacity been run in other factors as well due to the supply chain disruption. One of the clue is revenue down (-7%), inventory also down (-14%). Armstrong is geared up for growth before the Japan earthquake, so excess capacity is expected although not desired.
The PBT will suffer with reduced gross profit while other expense remain the same. I am taking as Armstrong is gear up and ready (in distribution network and staffing) toward the opportunities present ahead after the "black swan" events.
Too optimistic! I am prepare for the worst and hoping for the best as a shareholder.
(vested)
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