VS Industry Q4 profit up on higher revenue
Group optimistic on outlook as order flows remain stable
PETALING JAYA: Integrated electronics manufacturing services player VS Industry Bhd’s profit after tax and non-controlling interests (Patanci) increased 4.4% to RM38.4mil on the back of a 2.8% jump in revenue to RM1.01bil for its fourth quarter ended July 31.
The board has declared a fourth interim dividend of 0.6 sen per share, as well as proposed a final dividend of another 0.6 sen per share, bringing total dividend for the year ended July 31, 2018 (FY18) to 4.7 sen per share.
Total dividends in FY18 represent about 45% payout of VS Industry’s FY18 net profit. The group has a dividend policy of a 40% payout of net profit.
Meanwhile, for the full-year period, its Patanci was lower at RM150.8mil as compared to RM156.3mil in the previous year.
VS Industry said the softer earnings performance was largely due to a one-off charge from the loss on disposal of a subsidiary in China amounting to RM16.9mil recognised in the fourth quarter.
It is also due to initial set-up and testing costs incurred in the earlier quarters, as well as the significant reduction in contribution from its US customer in the third quarter following the planned production cessation of certain models.
Production of new models to replace those outdated models for the US customer subsequently commenced in fourth-quarter 2018.
Its revenue, however, recorded a record high of RM4.09bil, an increase of 24.7% from RM3.28bil in FY17. The robust growth was mainly due to higher sales orders from key multinational customers, which offset the decline in revenue from a major US customer.
In a statement, managing director Datuk S.Y. Gan said: “FY18 has been both an eventful and challenging year for VS Industry as we post another record-breaking annual reve- nue, having breached the RM4bil mark, which almost doubled from two years ago.
“Additionally, we are pleased to note that our earnings performance in the fourth quarter has improved significantly over the preceding quarter, which was adversely affected by the planned cessation of certain product models by our key US customer.
“Production for the new replacement models for this customer has since commenced and is gradually increasing in volume.”
He said the overall results are satisfactory, despite the continued profit margin pressure from higher material and labour costs.
“Looking ahead, we remain broadly optimistic on the group’s outlook, as order flows from our key customers remain stable and there are several new assembly lines scheduled to come on-stream over the next twelve months. Considering all these growth prospects, we expect performance to be satisfactory in FY19,” Gan added.
VS Industry said Malaysia remained the main revenue contributor to the group in FY18, representing 75.5% of total revenue, followed by China (16.9%) and Indonesia (7.4%).
VS Industry closed 10 sen higher to RM1.62 on a volume of 19.56 million shares.