KUALA LUMPUR (Feb 20): D&O Green Technologies Bhd almost doubled its net profit for the fourth quarter ended Dec 31, 2018 to RM12.33 million against RM6.94 million in the previous corresponding quarter, on the back of higher revenue and better gross profit margins.
Earnings per share for the quarter jumped to 1.12 sen from 0.69 sen a year ago as its gross profit margin rose 3.6 percentage points to 29.7% on better sales mix, cost management and efficiency gains.
Revenue rose 6.08% to RM140.58 million from RM132.53 million in 4QFY17.
D&O attributed the improvement in group revenue to a 7.1% growth in Automotive LED sales to RM135.9 million. However, it said that the top line growth rate in the current quarter was negatively impacted by a slowdown in vehicle sales in China and the European Union.
"Vehicle sales in China fell 13% year-on-year in the final quarter of last year as consumer sentiments took a beating from the on-going trade tension with the USA. In the European Union, vehicle sales were momentarily affected (down 10-12% in 4Q2018) by the introduction of WLTP (Worldwide Harmonised Light Vehicle Test Procedure) car emission regulation.”
For the full financial year, net profit spiked 60.8% to RM35.96 million against RM22.37 million in FY17, while revenue increased 5.92% to RM490.78 million from RM463.34 million.
On its prospects for the year, D&O expects to continue with its earnings growth trend in 2019 despite uncertainties arising from the trade tensions between the USA and China and the impact on consumer sentiment, vehicle demand, supply chain and investment plans.
"While lower car sales volume and supply chain adjustment may dampen revenue growth in the short term, the medium to long-term growth fundamentals of LED remain intact as the primary demand drivers of automotive LED are the introduction of new LED lighting applications and increased LED adoption as the preferred lighting," it said.
D&O closed 3 sen or 3.97% higher at 78.5 sen today for a market capitalisation of RM866.03 million.