KUALA LUMPUR (Dec 17): VS Industry Bhd’s net profit climbed 38.7% to RM66.68 million for the first quarter ended Oct 31, 2020 (1QFY21), from RM48.07 million a year ago, mainly due to a favourable product sales mix for its Malaysian operations.

This was despite a 4.6% drop in revenue to RM987.1 million, from RM1.03 billion, due to a lower contribution from its China business, its said in a stock exchange filing with Bursa Malaysia.

On a quarter-on-quarter (q-o-q) basis, its net profit rose 23.2% from RM54.12 million for 4QFY20, while revenue grew 11.84% from RM882.61 million.

The group declared a first interim dividend of 1.2 sen per share, which will be paid on March 5, 2021.

The group said its Malaysian segment posted a higher profit before tax of RM92 million due to earnings contributions from a more diversified clientele that led to an overall better product sales mix.

“The Indonesian segment recorded a lower profit before tax of RM0.5 million for the quarter under review, compared to a profit before tax of RM1.1 million for the preceding year's corresponding quarter, mainly due to lower sales orders and the absence of economies of scale,” it said.

Meanwhile, its China segment recorded a higher loss for the quarter in tandem with an decrease in revenue as operations continued to be affected by under-utilisation of capacity and the absence of large orders amid a highly challenging operating landscape in China.

On prospects, VS Industry said it will continue to keep fulfilling customers’ orders in the coming quarters, including several new product models that its customers are planning to launch in 2021.

It also said its existing capacity is expected to be filled up by 2021, noting that it secured a new customer in the US in August to produce cordless electrostatic sprayers on a box-build assembly basis, followed by the clinching of another new name in October to manufacture home appliances.

And to cater for future exansion, the group bought plots measuring an aggregate 413,682 sq ft in i-Park @ Senai Airport City, Johor for RM98.8 million. The group intends to move its headquarters there too when the new buildings are ready.

As for the remaining quarters of the financial year, the group expects its financial performance to be satisfactory, challenges notwithstanding, backed by an encouraging flow of orders from customers.

At the time of writing today, shares in VS Industry had slipped five sen or 1.85% to RM2.65, bringing the stock a market capitalisation of RM5.01 billion. It saw some 11.75 million shares done.