Volcano reports lower earnings for Jan-March period amid narrowing margin

KUALA LUMPUR (May 17): Volcano Bhd saw its net profit from January to March 2023 down 72% year-on-year as the nameplate and plastic injection moulded parts manufacturer incurred higher cost of goods sold despite recording lower revenue.

Net profit fell to RM550,000 for the quarter under review, from RM1.99 million a year ago, on the back of a 9.6%-lower revenue of RM18.89 million compared with the RM20.91 million in the same period a year ago, the group’s stock exchange filings show.

Earnings per share fell to 0.33 sen per share for January-March 2023 period, from 1.2 sen per share a year ago.

The group did not specifically provide an explanation on the year-on-year decline as it is in the midst of changing its financial year end to June 30 from Dec 31.

Nonetheless, in its commentary on financial performance, in comparison with the immediate preceding quarter, Volcano highlighted challenges like higher travelling, insurance and staff-related expenses amongst pressure on profitability.

Going forward, Volcano said sales demand for the nameplates segment and the plastic injection moulding parts segment is expected to be challenging amid the rising global economic concerns over inflation and softening demand from its products’ end-user industries.

Having said that, Volcano expects results for the financial year ending June 30, 2023 (FY2023) to remain “favourable”, barring any unforeseen circumstances “such as disruption to supply chain and potential economic slowdown”.

Last month, the group declared an interim dividend of 1.3 sen for FY2023, which was paid earlier this month on May 3.

The dividend came shortly after Volcano proposed a RM43 million private placement to fund its expansion plan, which includes the construction of new factories in Penang as well as in Rayong, Thailand.

Shares of Volcano, which nearly doubled year-to-date, closed 10 sen or 12% higher at 93 sen on Wednesday (May 17).

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