Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on March 27, 2019

KUALA LUMPUR: VS Industry Bhd’s net profit declined 14% to RM37.94 million for the second quarter ended January 31, 2019, from RM44.24 million a year earlier. Revenue fell 12% to RM982.65 million from RM1.12 billion in the previous year’s corresponding quarter.

In a filing with Bursa Malaysia, the group attributed the decline to lower overseas contributions. “Despite a commendable performance from operations in Malaysia, the group’s profit before tax declined in the current quarter, mainly attributable to lower or negative contributions from overseas operations. Indonesia turned in a marginal profit while losses were recorded in China,” said VS Industry.

Its operations in Malaysia saw a 13% increase in pre-tax profit to RM51.74 million from RM45.9 million a year earlier. The Indonesian business saw a drop in profit to RM318,000 from RM1.43 million.

It said the Indonesian operations were affected by a decline in sales orders from key customers, lower economies of scale and a weaker rupiah compared with those in the previous year.

The losses in China were due to lower sales orders completed. China reported a pre-tax loss of RM3.69 million, compared to a profit of RM20.28 million a year earlier.

For the first half (1H) of its financial year, the group’s net profit fell 11% to RM77.75 million from RM87.11 million. Revenue was down 6% to RM2.06 billion from RM2.19 billion.

“On a cumulative basis, these overseas operations, particularly in China, incurred losses that further affected the group’s earnings. In addition, the overall performance was also influenced by net foreign exchange movements,” it said.

VS Industry expects a lower profitability in 2H of the current financial year compared with that in 1H, due to softening orders from certain key customers.

However, it said the impact may be less than previously expected, considering the group has since received additional orders for a particular product that would partially cushion the moderating orders.

VS Industry’s share price rose three sen or 2.97% to RM1.04 yesterday, with a market capitalisation of RM1.89 billion.

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