KUALA LUMPUR (May 12): Greatech Technology Bhd said Thursday (May 12) that its net profit for the first quarter ended March 31, 2022 (1QFY22) tumbled 37.99% to RM28.93 million, due to the decline in gross profit (GP), share grant expenses and lesser net foreign exchange gain.
Its revenue for 1QFY22, however, rose 7.37% to RM102.16 million from RM95.14 million a year ago, its filing to Bursa Malaysia showed.
The group did not declare any dividend for the latest quarter.
According to the group, its revenue from single automated equipment (SAE) and provision of parts and services (PSS) increased RM11.32 million and RM680,000 respectively in 1QFY22.
The increase of both SAE and PSS revenue was primarily from revenue generated in electric vehicle (EV) energy storage, driven by several orders secured in the third quarter of 2021 for invoicing in early 2022 and increased sales of parts and services.
This, nevertheless, was offset by a RM4.99 million decrease in revenue generated from production line systems due to the lengthening global supply chain which negatively impacted the cycle time of the projects.
Meanwhile, it said the lower profit was primarily contributed by the decline of GP amounting to RM14.17 million, share grant expenses of RM990,000 and lower net foreign exchange gain of RM3.09 million.
The group has recorded a lower GP of RM35.21 million compared to RM49.38 million in the prior year's corresponding quarter, as well as lower GP margin of 34.47% versus 51.9% previously.
The normalised GP margin without net warranty impact was 36.27% for 1QFY22 and 46.41% for the prior year's corresponding quarter.
According to the group, 1QFY22's margin was partly impacted by increase in project expenditures as the new projects secured were in the fabrication and assembly stage.
The margin was also dragged by an increase in subcontract charges to ensure timely delivery of projects.
The group said Covid-19 new variant related operational inefficiencies arising from closed contact quarantine measures to minimise exposure has reduced manpower capacity and added subcontract cost to projects to meet delivery.
The group noted that the prior year's corresponding quarter also benefited from favourable GP margin mix realised from installation and commissioning revenue.
Coming off a strong year in 2021, the group said its business continued to be influenced by persistent supply chain bottlenecks, which not only led to rises in the cost of materials, components and freight, but also impacted the project execution and production efficiencies.
The group believes that as the conditions of the supply chain improve, it will enable execution and order conversion of ongoing customers, which will accelerate its growth in revenue throughout 2022.
Despite geopolitical tensions, persistent Covid-19 pandemic with renewed lockdowns in Shanghai, China, global supply chain constraint and increasingly inflationary environment, it said the demand for environmental and sustainability related solutions continued to benefit from the increase in investment driven by technological change in e-mobility and energy industry.
The group anticipates that supply-chain constraints will continue to pressure its industries.
“The group is working closely with its suppliers to address these challenges and remain focused on executing its strategy for long-term profitable growth,” it said.
As of May 9, 2022, the group’s order book stood at RM467 million, which is expected to last until the first half of 2023.
Greatech closed two sen or 5.59% lower at RM3.38 on Thursday, valuing the group at RM4.48 billion.
Year to date, the counter has fallen 51.58%.
Source: TheEdge - 13 May 2022
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