KUALA LUMPUR (March 27): A reduction in orders from key customers in Malaysia, China and Indonesia continued to weigh on the earnings of electronic manufacturing services (EMS) provider VS Industry Bhd as its net profit for the second financial quarter ended Jan 31, 2024 (2QFY2024) almost halved from the previous corresponding quarter.

The reduced orders, which was also the same reason the group cited for the fall in the previous 1QFY2024 earnings, affected the overall utilisation rate of its production capacity, VS Industry said in a filing to Bursa Malaysia on Wednesday.

VS Industry's net profit for 2QFY2024 fell 47.3% to RM16 million from RM30.36 million in the previous year, as revenue slipped 22% to RM895.02 million from RM1.15 billion.

Despite the lower quarterly earnings, VS Industry declared a second interim dividend of 0.3 sen per share, payable on April 30, 2024. This brings the total dividend per share for the current financial year to 0.6 sen compared with the 0.8 sen it declared during the corresponding period in the previous year.

For the first half of FY2024 (1HFY2024), net profit amounted to RM64.99 million, down 28.6% from RM91.07 million in the same period the previous year, as revenue dropped 16.1% to RM2.05 billion from RM2.44 billion previously.

Looking ahead, VS Industry said it is seeing encouraging signs as orders from its key customers are gradually rising again underpinned by normalization of inventory level and improving sentiments.

"In addition, the launching of new models by certain customers serves to sustain market interest as well," it said.

On top of that, VS Industry said there are also ongoing discussions with prospective customers that are charting good progress, as it looks to broaden its clientele by the end of the calendar year.

"All in all, the board opines that the financial performance of the group for the remaining quarters [will] gradually reflect improving performance, and [is] firmly supported by our lean balance sheet with low net gearing and healthy cash flow," it added.

At Wednesday’s closing bell, shares of VS Industry were one sen or 1.21% higher at 83.5 sen, giving it a market value of RM3.22 billion. Some 119,700 shares were traded.