PETALING JAYA: Electronics manufacturing services company VS Industry Bhd has posted a record annual net profit, as stronger sales orders from key clients boosted margins at its operations in Malaysia.
VS Industry joined furniture maker Poh Huat Resources Holdings Bhd to report higher sales and profits, as the two companies benefited from the ongoing trade tensions between the US and China.
Malaysia, they said, is one of the choice locations of multinational company brand owners who are relocating their manufacturing base from China to South-East Asia.
“The silver lining to the ongoing US-China trade dispute is that Malaysia stands to be a beneficiary, ” VS Industry managing director Datuk S Y Gan said in a statement yesterday.
He added that VS Industry’s business development taskforce has been busy with negotiations with prospective customers and pursuing various sales leads arising from the trade war.
“Management is positive that the group can secure new customers in the coming financial year, ” Gan said.
Net profit at VS Industry jumped 15% to RM48.4mil, or 2.67 sen a share, in the last quarter ended July 31 on a revenue of RM1.03bil.
This lifted its full-year earnings to a record RM157.5mil, or 8.84 sen a share, despite the slight decrease in revenue to RM3.98bil.
The group has declared a fourth interim dividend of 0.8 sen a share, as well as a final payout of 0.8 sen a share. Total payout of the year amounted to 4.4 sen a share, or about half of its annual profit.
VS Industry said its operations in Malaysia posted an 8.6% increase in revenue in the last quarter, while profit before tax surged 56%.
“The higher-than-proportionate increase in profitability was attributable to the improvement in production efficiency leading to greater economies of scale in the absence of set-up costs associated with commissioning of new lines that incurred during the same quarter and cumulative quarters a year ago, as well as owing to a more favourable product sales mix, ” it said in a separate filing with Bursa Malaysia yesterday.
The strong performance helped the company mitigate the impact of weaker results from its operations in Indonesia and China.
The group’s operations in China recorded a loss before tax of RM83mil on a revenue of RM388.1mil.
The weaker results included a net loss on the disposal of plant and equipment, an impairment loss on plant and equipment, as well as termination benefits for staff and employees of RM35mil.
VS Industry said the operating environment in China remained highly challenging, as the trade tension continued to affect the consumer and business sentiment there.
“The issue of under-utilisation of capacity is expected to prevail, as local customers in China are adopting a wait-and-see attitude and withholding orders due to economic uncertainties, ” it said.
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