VS Industry posts lower net profit in 1Q21

By TMR / Pic credit: vs-i.com

VS INDUSTRY Bhd posted lower net profit of RM39.4 million in the rst quarter ended Oct 31, 2021 (1Q21), compared to RM66.7 million posted in 1Q20.

While revenue for the quarter under review fell to RM967.9 million against RM987.1 million a year ago largely due to lower contribution from the operations in Malaysia with lower orders for printed circuit board assembly in 1QFY22, coupled with disruption to component supply, the company said in a statement yesterday.

The company also said the drop was also attributed to a combination of factors for its Malaysian operations that included increase in labour and raw materials costs, higher depreciation from new facilities,

setup costs for the Industrial Vaccination Centre under the Covid-19 Public-Private Partnership Industrial Immunisation Programme initiative at one of the company’s factories and the vaccination cost for the entire workforce.

Besides, mass production for a new key customer has commenced during the quarter under review but has yet to achieve optimal level. This, along with disruptions to the supply chain, had led to lower operational efficiency.

However, VS Industry said the impact was partially offset by higher production of box-built assembly for a new customer.

“The current challenging operating environment brought about by the Covid-19 pandemic and geopolitical uncertainties, among others, are expected to prevail.

“The much talked about disruption in the global supply chain has also resulted in component shortage and longer lead time, affecting many industries including electronics manufacturing services. In addition, the group faces some pressures given the rising cost environment,” said MD Datuk SY Gan.

He added that overall demand by customers remains robust and is largely expected to sustain in the coming quarters.

The group is also currently in advanced discussion with key customers on potential new orders, which if materialised, will contribute to future earnings.