KUALA LUMPUR, Dec 28 (Bernama) -- Foreign exchange, labour shortage, availability of raw materials but volatile prices were among the challenges faced this year by furniture company, Homeritz Corporation Bhd.

The group is exposed to foreign currency exchange risks as approximately 97 per cent and 60 per cent of the company’s revenue and total purchases of raw materials, respectively, are denominated in US dollars.

“Fluctuations in US dollar exchange rate will have an impact on the price of imported raw materials as well as export earnings, which will in turn affect the group's profitability.

“The group’s profit margin is generally expected to improve if the US dollar strengthens against the ringgit which will then increase profitability,” the company said in its 2018 Annual Report.

The report also noted that the group was subject to labour shortage risk and increase in labour costs.

“The group has to resort to recruiting foreign workers as we face difficulty in employing local workforce. Hence, the group is required to comply with the policies imposed by the government with regards to the employment of these foreign workers,” it said.

The company also said that any future change to such policies may affect the company’s ability to employ foreign workers.

“In such event, if the group is unable to find suitable replacements, production would be interrupted and consequently, affect revenue and profits of the company,” it said.

As for outlook, the company would continue to remain focused on its core business and to develop new products, new design for existing products, derive better cost efficiencies and effective cost management across all functions.

“Our group will continue diversifying its customer’s base and broadening geographical coverage into other regions. The board expects the group to continue remaining profitable in the financial year ending (FYE) 2019,” it said.

For the financial year ended 31 Aug, 2018, the company recorded a net profit of RM21.06 million compared with RM30.88 million in 2017 on the back of RM166.44 million in revenue.   

The company is also proposing a final single tier tax exempt dividend of 1.5 cents per ordinary share and total dividend paid and proposed for FYE 2018 is 2.5 cents per share.

-- BERNAMA