VS Industry posts decline in 2Q net profit to RM44.49mil

KUALA LUMPUR: VS Industry Bhd's net profit in the second quarter ended Jan 31, 2020, fell to RM44.49mil from RM63.79mil in the previous corresponding quarter on lower orders from key customers and disruptions in the global supply chain.

For the quarter under review, the electronics manufacturer said revenue was RM1.01bil, 1.5% higher than in the same quarter in the previous year.

The board of directors declared a dividend of 0.4 sen per share, with ex and payment dates on April 14 and April 29, 2022, respectively.

According to VS Industry, its Malaysia business posted a 5.8% year-on-year increase in revenue due to higher sales orders from key customers. However, pre-tax profit fell 32% over the same period.

"The reduced profitability was affected by a combination of factors that included increase in labour and raw materials costs, as well as higher depreciation incurred from new facilities while mass production for a new key customer has yet to achieve optimal level.

"These, along with worker shortage issue and disruptions to supply chain (in particular, component shortage), had led to lower operational efficiency," said the group.

Meanwhile, its Indonesia and China markets also registered lower revenues.

In China, the operating loss was higher in comparison to the same quarter of the preceding year as the revenue base was insufficient to cover the fixed cost, in addition to the challenges of the rising cost structure and difficult operating landscape.

Moving forward, VS Industry said overall customer demand remains strong and is expected to sustain in the coming quarters.

"Mass production for the new key customer is expected to ramp up once labour sufficiency issue is resolved," it said.

"On balance, the Board is cautiously optimistic on the outlook of the Group and opines that the financial performance of the Group for the remaining quarters to be satisfactory," it added.