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HONG KONG, Nov. 8, 2010 (GLOBE NEWSWIRE) -- Highway Holdings Limited (Nasdaq:HIHO) today reported strong results for its second fiscal quarter ended September 30, 2010, reflecting an improved business environment among its major customers and new business gains.
Net income for the 2011 fiscal second quarter increased to $410,000 or $0.11 per diluted share, from $139,000, or $0.04 per diluted share, a year earlier. Net sales for same period climbed 50 percent to $7.8 million from $5.2 million a year earlier.
Net income for the first half of fiscal 2011 was $ 454,000, or $0.12 per diluted share, compared with net income of $3,000, or $0.00 per diluted share, a year earlier. Net sales for the six-month period jumped 45.3 percent to $14.3 million from $9.8 million a year ago.
"Results for the quarter and first half of fiscal 2011 reflect a greatly improved business environment, with increased order flow from existing and new customers," said Roland Kohl, president and chief executive officer.
Despite a significant increase in both net sales and net income, Kohl stated that net income could have been higher. He noted that operating income for the quarter was $167,000, or approximately two percent of net sales, due to a 60 percent increase in labor costs, most of which had not yet been passed through to customers under terms of existing contracts. Under terms of many of the company's OEM contracts, prices are adjusted quarterly to reflect increases in raw material and employment costs. Kohl added that the company's strong sales gains for the quarter were not sufficient to offset these sharp labor and personnel cost increases. "We anticipate operating income will improve in future quarters as these higher labor costs are passed through as price increases to our customers," Kohl said. He said that prior initiatives designed to reduce dependency on certain labor processes through assembly automation and robotic manufacturing technology helped to partially offset the higher labor costs in the quarter.