KUALA LUMPUR (Aug 12): PIE Industrial Bhd's net profit for the second quarter ended June 30, 2022 (2QFY22) fell 36.41% to RM8 million from RM12.59 million a year ago, mainly attributable to higher labour costs and provision for slow-moving inventories in the quarter.

Earnings per share dropped to 2.15 sen per share in 2QFY22, from 3.48 sen in 2QFY21.

This was despite higher revenue, income from scrap sales and reversal of impairment of trade receivables, the electronics manufacturing services company said in a Bursa Malaysia filing.

Quarterly revenue was up 25.88% to RM296.3 million from RM235.38 million in the previous year amid higher demand from new and existing customers for electronics manufacturing, raw wire and cable products, and wire harness products.

For the cumulative six months ended June 30, 2022 (6MFY22), its net profit rose 11.43% to RM27.1 million, compared with RM24.32 million in 6MFY21. Its 6MFY22 revenue also expanded 13% to RM563.29 million from RM498.55 million.

The improvement in profitability was mainly due to PIE Industrial obtaining new product orders from new customers for electronics manufacturing activity. This was aided by higher revenue, gain from foreign exchange transactions, income from scrap sales, lower administrative and distribution expenses and reversal of impairment of trade receivables.

Noting that its electronics manufacturing activity during 2QFY22 were severely affected due to the labour shortages and the implementation of new minimum wage starting from May 1, the company said the new foreign labour have already started to arrive in batches and it expects full arrival taking place this month.

It said that productivity and efficiency should improve accordingly and production activities stabilised with the incoming foreign labour.

"Further to price increase negotiations with customers due to the increase in minimum wage, most customers are agreeable to raise the selling price albeit at different later months," it added.

Meanwhile, it said the new plant catering to a new customer is now fully operational and this can better fulfil the orders from this new customer.

For its manufacturing activity of raw wires and cables, it said revenue derived from this segment will continue to grow with a consistent profit margin in the near future.

"There is an increasing trend of the copper price since the end of FY20. However, this division is able to maintain its profit margin as the selling price quoted to customers is pegged to the copper price determined according to the market," it explained.

"With the incoming new foreign labour and new PIE plant 3, 2H22 (second half of 2022) should be a robust period compared with the much chaotic 1H22," it concluded.

Shares in PIE Industrial closed down five sen or 1.5% to RM3.28 on Friday (Aug 12), giving it a market capitalisation of RM1.26 billion.

However, the stock has rebounded 46% from its low of RM2.24 seen on March 8 this year.