KUALA LUMPUR (Aug 4): Dufu Technology Corp Bhd's second quarter net profit slipped a marginal 5.32% to RM9.81 million from RM10.37 million a year, despite a jump in revenue, no thanks to unrealised forex losses and employee share option expenses, besides higher overhead costs. 

Nevertheless, the micro-precision machining manufacturer declared a 1.25 sen interim dividend payable on Sept 25. In contrast, it paid an interim dividend of 2 sen in the corresponding period last year.

In its stock exchange filing today, Dufu said revenue increased 37.69% to RM73.41 million from RM53.32 million previously, due to an increase in volume loading by customers related to hard disk drives (HDD) components. 

However, Dufu said an unrealised forex loss of RM3.5 million for the quarter — as opposed to an unrealized forex gain of RM1.2 million in the year-ago quarter — and additional employee share option expenses of RM0.8 million dragged down its profit.

The company also said it had provided hardship allowance for workers who came back to work during the Movement Control Order (MCO), after it received permission to resume operations in April, albeit at a lower capacity.

“Obviously, with lower output from our Malaysian operations and higher cost of compliance, labour and overhead costs per unit of volume produced increased and dented the group’s profitability in the second quarter of the current financial year,” Dufu said.

Looking ahead, Dufu sees the uncertainty brought about by the Covid-19 pandemic, which had shut down its plants in Malaysia and China, as a serious challenge. All its plants, however, have since resumed operations.

But the eventual impact of the pandemic to its operations will largely be dependent on the scale and length of the outbreak, Dufu said, which will ultimately be determined by how the virus spreads and evolves and how fast governments worldwide reopen their respective countries, which is almost impossible to predict at this point. 

“On top of this, we are concerned with a potential global supply chain disruption risk, which may temporarily impact the demand of our own and customer’s product lines. Nevertheless, we expect a better second half outlook for the group’s products, in line with current orders in hand and thus, we are expecting that the group will be able to achieve satisfactory results in the financial year ending 2020, despite the above uncertainties,” the group concluded.

Dufu shares closed seven sen or 1.85% lower at RM3.72 today, valuing the tech group at RM1.93 billion, after 4.13 million shares were traded. The counter has risen 14.81% year-to-date, from RM3.24.