VS Industry’s 4Q profit down, operations in Indonesia, China still in the red

The company’s performance is affected by lower delivery of orders to key customers due to labour shortage and protracted disruption in the global supply chain

by NURUL SUHAIDI / Pic source from www.vs-i.com

VS INDUSTRY Bhd’s net profit dropped 16.7% to RM34.57 million in the fourth quarter ended July 31, 2022 (4Q22), from RM41.5 million a year earlier, with its operations in Indonesia and China in the red.

The quarterly profit was down primarily due to a one-off associate investment impairment and impairment loss on plant and equipment, it said in an exchange filing yesterday.

The integrated electronics manufacturing services provider posted RM1 billion in revenue for the quarter under review, up 6.7% from 4Q21.

For the financial year ended July 31, 2022 (FY22), the group recorded a marginally lower revenue of RM3.91 billion compared to the preceding year of RM4 billion. In that period, it posted a net profit of RM169.74 million, down 30.8% from RM245.35 million in FY21.

In addition to the impairment, the company said performance was also affected by lower delivery of orders to key customers during the period due to labour shortage, as well as protracted disruption in the global supply chain which affected supply of components, while mass production for a new key customer has yet to achieve optimal level.

For FY22, revenue from Malaysia was RM3.48 billion or 89% of its total revenue. For the full year, the Malaysian and Indonesian operations were profitable, contributing a pre-tax profit of RM230.74 million and RM8.36 million, respectively. China posted a full year pre-tax loss of RM37.45 million.

In 4Q22, Malaysia saw an increase in revenue mainly due to higher delivery of orders to key customers. However, Indonesia and China incurred losses due to the challenging environment and absence of large orders.

It said operations in China continued to sustain losses given the highly challenging environment in the country. In the absence of large orders, the low revenue base was insufficient to cover fixed costs.

The company said it saw “some bright spots” with labour shortages now resolved following the arrival of adequate numbers of foreign workers.

“Supply chain and logistics issues, while challenging, are manageable as we have also stocked up on certain raw materials with longer lead time. Order flow from customers remains reasonable at this juncture,” it said.

The total dividend per share for FY22 is two sen compared to 4.2 sen in the previous year.