Ge-Shen’s 2Q net profit falls 83.7% on lower revenue, inflation

Consequently, the firm’s EPS also drops to 0.55 sen

by ANIS HAZIM / pic source:

GE-SHEN Corp Bhd saw its net profit in the second quarter ended June 30 (2Q22) decline by 83.7% to RM600,000 against RM3.71 million a year earlier due to lower revenue, higher costs of labour on the back of inflationary situation.

Consequently, earnings per share (EPS) dropped to 0.55 sen from 3.38 sen previously.

In a Bursa Malaysia filing yesterday, the contract manufacturer said its revenue also declined 8.7% to RM59.94 million from RM65.63 million in the previous year.

On a quarterly basis, the group’s net profit dropped 74.3% from RM2.34 million in 1Q22, while revenue also declined by 7.7% from RM64.96 billion in 1Q22.

Operations wise, the group facilities in Penang and Vietnam managed to maintain their revenue in comparison with the previous year notwithstanding the uncertain operating environment.

However, its two facilities in Johor were more impacted as the demand decline affected the facilities in the southern part of Malaysia.

Commenting on its prospect, Ge-Shen said they have been renegotiating manufacturing rates with its customers to reflect the much higher cost of doing business today.

“In instances where we see that with the customers’ pricing, we are unable to meet our profit expectations, we will also be in discussion with these customers to cease production for the specific products,” it noted.

Hence, it noted that this will result in lower revenues in the short term but ensure a longer-term sustainability and business continuity as the group will free up capacity to serve new customers.

In the longer term, Ge-Shen is optimistic that the global trend is very much in the group’s favour with an increase in customer engagement on the back of economic recovery.

“This allows for greater business development opportunities and hopefully more exciting business opportunities coming to fruition,” it added.

Ge-Shen’s share price closed unchanged at 97 sen, giving it a market capitalisation at RM106.72 million.