KUALA LUMPUR (June 25): VS Industry Bhd's third quarter net profit grew 43.15% to RM31.38 million, from RM21.92 million a year earlier, on the back of higher sales from key customers in Malaysia.

Earnings per share for the quarter ended April 30, 2019 rose to 1.74 sen from 1.32 sen.

Quarterly revenue, however, was up marginally by 0.92% to RM889.71 million against RM881.6 million previously, according to the group's filing to Bursa Malaysia today.

"The higher-than-proportionate increase in profitability was attributable to increase in productivity with production lines running at more optimal level, as well as absence of set-up costs associated with commissioning of new lines that incurred during the same quarter and cumulative quarters a year ago," said VS Industry.

The group declared a third interim dividend of 0.8 sen per share for the financial year ending July 31, 2019 (FY19), payable on July 31.

For the first nine months of FY19, VS Industry's net profit grew marginally by 0.09% to RM109.13 million, from RM109.03 million last year, while revenue was down 4.09% to RM2.95 billion, from RM3.07 billion.

Moving ahead, VS Industry said the financial performance of the group in the current financial year is satisfactory.

"Despite the short-term challenges, the board remains positive on the long-term prospects of the group, underpinned by solid fundamentals, robust relationships with existing customers, strong execution skills, recent addition of new key customer and potential future contract win," the group said.

It added that in Malaysia, its business development taskforce continues to engage with prospective customers to negotiate terms while pursuing various sales leads arising from trade diversion activities.

VS Industry said the group stands to benefit from the US-China trade war as many multinational company brand owners are relocating their manufacturing base from China to Southeast Asia, with Malaysia being one of the choice locations, adding that it is opportune that the group has ready production facility to take up these new businesses.

Noting that the group's operations in China remain difficult, VS Industry said the performance there continues to be impinged by rising cost and competition with export sales to the US affected by the trade war, while local customers in China are holding back orders due to economic uncertainties.

VS Industry's share price closed unchanged at RM1.12, valuing the company at RM2.03 billion. Year to date, the counter has risen as much as 57.52% from 71 sen.