FJ Benjamin says the weakening macroeconomic outlook means it will have a challenging financial year. Its profitability will be affected by fluctuations in foreign exchange. In the meantime, it will try to control costs and improve its cash flow.

The retailer’s Q1 2009 revenue rose 3% to S$84 mln. The retailer said the marginal increase was due to the global economic woes and weakening consumer sentiment.

Net profit dropped 73% to S$1.1 mln. This was mainly due to unrealised non-cash foreign exchange losses of S$1.4 mln, compared with a gain of S$800,000 in Q1 2008.

It generated S$14.3 mln in cash from operations compared to the S$1.2 mln.

Analysts surveyed by Reuters have on average a HOLD call on the stock with a price target of S$0.27, compared to its last traded price of S$0.19.

~ Jin San’s take ~
FJ Benjamin has reported yet another weak quarter. At least it didn’t suffer a net loss this quarter like it did in Q4 2008. Things don’t look positive for the retailer as the weaker consuming spending in the region will negatively affect its earnings for this year. This is more than a bit worrying, as it has been in negative free cash flow position for the past two FY (even though it's positive for its latest quarter.

Like the rest of the market, FJ Benjamin's stock has taken a beating and its P/E now stands at 7.71 and its P/B is at 0.82.

As always, please see your licensed financial advisor before making any investment decisions.