KUALA LUMPUR: Elk-Desa Resources Bhd’s net profit for the second quarter ended Sept 30 fell more than half to RM4.75mil from RM10.79mil a year ago.

       ELK-Desa said the decline in performance was predominantly due to business disruptions during the full lockdown imposed between June and September 2021.

       The non-bank lender’s revenue for the quarter decreased to RM23.36mil from RM37.39mil due to lower contribution from both hire purchase and furniture segments.

       ELK-Desa has declared a single-tier interim dividend of two sen per share in respect of the current financial year ending March 31, 2022 (FY22), to be paid on Dec 16, 2021.

       For the first six months to Sept 30, ELK-Desa posted a net profit of RM9.71mil, down 19.3% from RM12.03mil a year ago while revenue decreased 19% to RM54.73mil.

       The decrease in revenue and profit before tax were mainly due to lower contributions from the both hire purchase and furniture segments for the financial period ended Sept 30.

       As at Sept 30, the group’s hire purchase receivables stood at RM469.87mil, which is 13% lower than the previous year.

       Bank borrowings decreased by 14% mainly due to repayment of block discounting facilities and term loans and the group's gearing remains at a low level of 0.34 times.

       For the hire purchase segment, revenue decreased by 20% to RM18.62mil, as a result of a smaller hire purchase portfolio. There was also no hire purchase disbursement during the quarter under review due to the Full Movement Control Order (MCO).

       Both impairment allowance and credit loss charge increased by 95% to RM5.36mil and from 0.47% to 1.01% respectively.

       “In view of the lower hire purchase portfolio achieved to date, ELK-Desa expects its performance for the financial year ending March 31, 2022, to be lower than the previous financial year due to disruptions in generating new hire purchase loans during the full lockdown,” ELK-Desa executive director and chief financial officer Teoh Seng Hee said in a statement.

       “In the immediate term, we still have to maintain a cautious stance as the disruptions caused by the MCO may impact our customers’ capability of fulfilling their loan obligations.

       “We will concentrate our efforts to ensure our hire purchase receivables would not decline further while being focused on credit risk management to protect the quality of our assets,” he said.

       Teoh also said that in the medium to long term, ELK-Desa is confident that the operating landscape will improve.

       “The fast-paced national vaccination programme, economic stimulus packages and recovery initiatives announced in Budget 2022, as well as the resumption of business activities, locally are expected to positively impact our economy as a whole.

       “While demand for hire purchase solutions has always been resilient, a stronger economy in the near future would allow us to better mitigate credit risks as we shift towards expanding our hire purchase portfolio,” he added.