KUALA LUMPUR (Feb 28): ATA IMS Bhd's net profit came down by nearly 90% to RM5.53 million for the third quarter ended Dec 31, 2021 (3QFY22), from RM53.31 million a year earlier, as revenue was hit by manpower shortages that resulted in under-utilisation of  production capacity.

Revenue declined 41.66% to RM683.81 million, from RM1.17 billion in 3QFY21, according to ATA IMS' filing with Bursa Malaysia.

On a quarter-on-quarter basis, the group returned to the black from a net loss of RM11.17 million in 2QFY22, thanks mainly to a reversal of provision for the Tenaga Nasional Bhd legal case of RM 5.09 million.

Revenue meanwhile was 15.03% higher than the RM594.48 million reported for 2QFY22, helped by the resumption of business operations amid the National Recovery Plan.

Due to the impact of Movement Control Order and the shortage of workers, ATA IMS estimates the turnover for FY22 to reduce by 40% from FY21, with another 30% reduction for FY23.

It said it will continue to undertake cost-cutting measures in response to the termination of contracts, and work towards downsizing to maintain profitability and to ensure sustainability.

Dyson said in November that it was terminating its contracts with ATA IMS effective June 1, following an independent audit of the company's labour practices and allegations of poor living conditions, recruitment of foreign migrant workers, and unpaid allowances and bonuses, among others. 

The British firm accounts for about 80% of the group's revenue.

ATA IMS said about 50% of excess stocks has been resold and negotiations are still ongoing to sort out the inventory for raw material and components on hand to be assembled or sold back to customer or other manufacturers.

“In accordance with the contract with customers, all stocks for customers are to be purchased back by customers, where discussions with customers are taking place to ensure all stocks can be cleared before June 1, 2022,” the group said.

It added that its management has identified 10 factories or warehouses to be discontinued, and is in talks with the landlords to return the properties before expiry of the tenancy agreements.ATA IMS shares closed down two sen or 4.6% at  at 41.5 sen on Monday (Feb 28), giving it a market capitalisation of RM494.13 million.

The stock has declined 31.97% year-to-date from 61 sen, and 85.49% over the past one year from RM2.86.