KUALA LUMPUR (May 29): Hit by the weak Chinese automotive market, D&O Green Technologies Bhd's net profit tumbled 97.17% to RM863,000 for the first quarter ended March 31, 2023 (1QFY2023), from RM30.45 million a year earlier.

Revenue declined 11.13% to RM214.72 million from RM241.6 million in 1QFY2022 primarily as a result of the lower sales of China-manufactured cars, and an overhang of car inventory in China.

"Despite being significantly affected by the China automotive market in 1Q2023, D&O's performance is now recovering in line with the market trend," the automotive light-emitting diode (LED) manufacturer added in a bourse filing on Monday (May 29).

"With its ready capacity, D&O is well-positioned to capitalise on the expected recovery in China's car sales. Barring any unforeseen circumstances, the management remains optimistic that the remaining period of 2023 will deliver year-on-year revenue growth," said D&O.

According to the filing, gross profit margin dropped to RM33.87 million in 1QFY2023 from RM67.43 million a year ago, while inventory impairment increased to RM4.27 million from RM2.08 million.

It said the fall in the gross profit margin to 15.8%, from 27.9% in 1QFY2022, was due to capacity expansion in 2022, as well as the effects of the higher minimum wage.

“The group reported a net profit in 1QFY2023 after the recognition of unutilised capital allowance and reinvestment allowance from capital expenditure investment,” said D&O.

D&O’s share price finished down one sen or 0.26% to RM3.89, valuing the group at RM4.82 billion.