Highway Holdings Limited reported its second‑quarter fiscal 2026 results on December 15, 2025, showing net sales of $1.18 million, a 44 % decline from $2.11 million a year earlier. The company posted a net loss of $373,000, or $0.08 per diluted share, compared with a net income of $231,000, or $0.05 per diluted share, in the same quarter last year. Gross profit fell to $301,000, and the gross‑profit margin contracted to 25.5 % from 39.4 % year‑ago.
Quarter‑over‑quarter, net sales dropped 24 % from $1.55 million in the first quarter of fiscal 2026, while the company’s net income slipped from $0.01 per diluted share to a loss of $0.08. The sharp revenue decline is largely attributable to the loss of a key motor OEM customer that shifted a substantial portion of its production to its own Czech plant, removing a significant share of Highway’s motor business from the top line.
Management said the company has secured a new motor contract with another OEM that is expected to offset the loss over time, and it received a substantial order from a former gaming‑industry customer that is returning to the firm. CEO Roland Kohl noted that the company’s cash position remains strong, with $5.6 million in cash and cash equivalents, and that the workforce in Myanmar has been reduced as production shifts to the Shenzhen facility.
The decline in gross‑profit margin reflects both the lower mix of higher‑margin motor products and the impact of the customer shift, which reduced the company’s ability to command premium pricing. While the company’s operating costs have remained relatively flat, the loss of volume and the lower margin mix have eroded profitability, turning a prior year’s net income into a net loss.
Highway Holdings remains heavily dependent on a small number of OEM customers, and the recent customer shift underscores the concentration risk. However, the new OEM contract and the returning gaming order provide a path to recover revenue and margin in the coming quarters, while the company’s solid cash reserves give it flexibility to navigate the transition.
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