KUALA LUMPUR (Nov 15): VSTECS Bhd’s net profit in the third quarter ended September 30, 2023 (3QFY2023) dropped 23.02% to RM12.73 million, from RM16.54 million last year, on higher distribution expenses, as it recorded lower sales revenue in the period.

Also contributing to the weaker performance was higher impairments of financial instruments and lower forex gains, the ICT products, software and IT services provider said in its filing.

Quarterly earnings per share declined slightly to 3.60 sen from 4.60 sen in 3QFY2022.

Revenue in the quarter fell by 12.12% to RM646.41 million from RM735.53 million, due to lower sales from both ICT distribution and enterprise system segments.

The group declared a first interim dividend of 2.50 sen per share — unchanged from last year — to be paid on Jan 12, 2024.

For the nine-month period ended September 30, 2023 (9MFY2023), the group’s net profit rose by 4.34% to RM43.23 million against RM41.43 million on the back of higher forex gains, which offset higher distribution and administrative expenses.

Revenue, on the other hand, dropped by 8.02% to RM1.92 billion from RM2.09 billion as its ICT distribution and enterprise systems contribution fell, which VSTECS attributed to the slowdown in the consumer market.

On a quarterly basis, VSTECS’ net profit came in 18.7% lower from RM15.65 million in 2QFY2023, despite revenue rising 6.2% from RM608.79 million as its ICT distribution and services segments both rebounded.

VSTECS’ CEO JH Soong said muted consumer spending continued to impact the ICT distribution segment, while the enterprise systems segment witnessed a temporary contraction due to the timing of project deliverables and the pending decision of several key public sector and large enterprise projects.

“Despite a softer performance in the third quarter, we hold a positive outlook for the remainder of the financial year.

“Looking ahead to the fourth quarter, we anticipate a pick-up in the ICT distribution segment with the festive season spending.

“Consumer spending on end-point devices should regain momentum by next year, with the increase of 5G availability and the onset of the replacement cycle for numerous consumer IT products previously sold during the pandemic era,” he said.

VSTECS shares settled unchanged at RM1.35 on Wednesday, giving it a market capitalisation of RM486 million.