VS Industry's 4Q net profit falls 17% on one-off impairment; FY22 earnings down 31%

KUALA LUMPUR (Sept 27): VS Industry Bhd's net profit fell 16.69% to RM34.57 million for its fourth quarter ended July 31, 2022 (4QFY22), from RM41.5 million a year earlier, following a RM25.8 million one-off impairment on investment in an associate.

The lower earnings were also due to a RM12.4 million impairment loss on plant and equipment, the electronics manufacturing services provider said in a Bursa Malaysia filing.

Quarterly revenue rose 6.72% to just over RM1 billion from RM941.1 million, as the group's Malaysian segment registered a 11.21% rise to RM908.26 million in delivery of orders to key customers.

Compared with the immediate preceding quarter, VS saw its net profit tumble 32.6% from RM51.29 million despite revenue rising 8.28% from RM927.59 million.

VS Industry declared a fourth interim dividend of 0.4 sen per share and a final dividend of 0.4 sen. These brought the total dividend for FY22 to two sen per share, compared with 4.2 sen in FY21.

For the full financial year, the group's net profit dropped 30.82% to RM169.74 million from RM245.35 million for FY21. FY22 revenue slipped 2.2% to RM3.91 billion from RM4 billion.

The group said its FY22 performance was affected by a lower delivery of orders to key customers amid labour shortages and protracted disruptions in the global supply chain, which affected supply of components. Furthermore, mass production for a new key customer has yet to achieve an optimal level, it said.

On prospects, VS Industry said: "Apart from inflation, there is also recession fear. Against this backdrop, consumer sentiments ebbing with cautious spending are likely to prevail."

There are, however, some bright spots with labour shortages now resolved following the arrival of adequate numbers of foreign workers.

"Supply chain and logistics issues, while challenging, are manageable as we have also stocked up on certain raw materials with longer lead time. Order flow from customers remains reasonable at this juncture.

"Barring unforeseen circumstances, the board opines that the financial performance of the group for the coming fiscal year will be satisfactory," it added.

At the closing bell on Tuesday (Sept 27), VS Industry's share price was up 1.63% or 1.5 sen to 93.5 sen, valuing the group at RM3.58 billion.