KUALA LUMPUR (Sept 24): VS Industry Bhd wrapped up its earnings on a high note having delivered a record high net profit for the financial year ended July 31, 2021 (FY21) despite witnessing its fourth quarter net profit slipping down.

The electronics manufacturing services provider posted its highest-ever profit after tax and non-controlling interest (net profit) in its history with FY21 net profit soaring more than two-fold to RM245.3 million versus RM116.5 million recorded in FY20. This surpassed the previous record of RM165.4 million achieved in FY19.

VS Industry said in a statement today that this was parallel with the top-line improvement while the larger-than-proportionate rise in profitability was due to favourable product sales mix in Malaysia, stemming from a more diversified clientele, turnaround in performance from Indonesia as well as much narrower losses incurred in China.

Full year revenue meanwhile rose 23.4% year-on-year (y-o-y) to RM4 billion compared with RM3.24 billion in the previous year, with the double-digit growth primarily attributed to higher sales orders received from its key customers in Malaysia and Indonesia. Sales from Malaysia and Indonesia increased 28.2% and 47.5% y-o-y to RM3.48 billion and RM350 million respectively in FY21.

Looking ahead, VS Industry managing director Datuk SY Gan said in the statement that the demanding operating environment brought about by the Covid-19 pandemic, coupled with supply chain disruption, among others, is expected to prevail over the next 12 months.

"While the situation in Malaysia remains uncertain with the persistent high (number of) cases of Covid-19 infections, the significant progress made by the National Covid-19 Immunisation Programme would further pave the way towards the resumption of economic activities," he added.

On the demand outlook, Gan said orders across key customers in Malaysia continue to be healthy and robust, while noting further that there are several new product models coming into production progressively over the coming quarters.

"We have also recently commenced box-build production for a new customer from the US. Over in Indonesia, the good performance so far is expected to sustain based on current order visibility. As for operations in China, there are some preliminary discussions with prospective customers, but our immediate focus remains on cost management given the taxing environment there.

"All in all, we are cognisant of the challenges ahead. The leadership is fully hands-on in managing the situation and is confident to deliver the optimal outcome for clients while keeping employees safe. With prudent planning and careful execution by the management, the board opines that the financial performance of the group for the coming financial year will be satisfactory," he said.

For the four quarter ended July 31, 2021 (4QFY21), VS Industry saw its net profit slip 24.21% lower to RM41.48 million from RM54.73 million, with its earnings per share easing to 1.09 sen from 1.46 sen in the same period last year, its filling with Bursa Malaysia showed today.

VS Industry attributed the fall mainly to a one-off (non-cash) impairment on the investment in associate amounting to RM25 million.

"Excluding this impairment, adjusted profit before tax actually grew by RM7.8 million compared with the corresponding quarter, notwithstanding the fact that sales in Malaysia were affected by the implementation of Full Movement Control Order (FMCO) effective June 1, 2021 in which only 60% workforce was allowed to work, and further impacted by the Enhanced Movement Control Order (EMCO) from July 9, 2021 till July 22, 2021 in which the production lines were not operating," it said in the filing.

Revenue for the quarter however was 6.63% higher at RM941.12 million from RM882.61 million, mainly due to higher sales orders from key customers in Malaysia and Indonesia, notwithstanding the fact that sales in Malaysia were affected by the implementation of FMCO coupled with EMCO in the current quarter under review.

For 4QFY21, VS Industry said it has resumed its quarterly dividend payout practice, with the board having declared a fourth interim dividend of 0.5 sen per share for the quarter under review due payable on Oct 29, 2021.

It has also proposed a final dividend of 0.5 sen per share, subject to shareholders' approval at the upcoming annual general meeting, with the details of the book closure date and payment date to be announced at a later date, it added.

"The total dividend for the current financial year shall amount to approximately RM113.8 million, representing a 46.4% payout based on FY21 net profit of RM245.3 million. The group has a dividend policy of 40% payout of net profit," it noted.

At the time of writing, VS Industry's share price was unchanged at RM1.52, valuing the group at RM5.81 billion.