KUALA LUMPUR: Electronics manufacturing services (EMS) provider VS Industry Bhd (VSB) posted a net profit of RM66.1 million for the fourth quarter (Q4) ended July 31, 2023 (FY23), an increase of 85.7 per cent year-on-year (YoY) from RM36.5 million posted in the same quarter last year.
Revenue stood at RM1.16 billion in Q4 versus RM1.00 billion a year ago, an increase of 15.7 per cent YoY.
The positive earning was attributed to foreign exchange gain in addition to the rise mentioned above in sales orders and impairments incurred in Q4 FY22.
For FY23, VSB's net profit was RM183.9 million visà-vis RM170.8 million a year ago.
The smaller-than-proportionate 7.7 per cent YoY growth was due to a higher effective tax rate, as losses incurred by certain subsidiaries could not be offset against profits from other subsidiaries, in addition to some non-deductible expenses.
Revenue for FY23 rose 17.5 per cent to RM4.60 billion YoY compared to RM3.91 billion in FY22.
The double-digit improvement was attributed to higher sales orders from existing key customers.
Managing director Datuk SY Gan said that on the macroeconomic level, the pace and the magnitude of interest rate hikes has somewhat slowed down, while some central banks are pausing as inflationary pressures appear to have moderated.
"Nonetheless, we expect the operating environment for businesses in Malaysia to remain challenging due to the heightened cost structure following the increase in labour, utility and financing expenditures.
"We look forward to our recent synergistic acquisition to enhance our value chain within the tools and die design, fabrication, machining and surface finishing division.
"This would broaden our manufacturing services offerings and further strengthen our position as a vertically integrated electronics manufacturing services provider," he said in a statement.
To recap, VSB recently acquired a 11 per cent equity interest in HT Press Work Sdn Bhd (HTPW) for RM2.6 million.
This is in addition to the 40 per cent stake in HTPW that VSB acquired in May 2023.
As such, VSB will hold a total of 51 per cent interest in HTPW upon completion of the acquisition, effectively turning the latter into a subsidiary of the company.
HTPW specialises in metal stamping, tools and die design and fabrication, machining, anodising and surface finishing of aluminium products with over 28 years of track record.
On balance sheet strength, VSB's financial position remained healthy, with low net gearing of 0.08x as of July 2023, backed by net assets of RM0.56 per share and gross cash holdings of RM689.0 million.
In line with its quarterly dividend payout practice, the board has declared a fourth interim dividend of 0.5 sen per share for the quarter.
It has also proposed a final dividend of 0.5 sen per share, subject to shareholders' approval at the upcoming annual general meeting.
The total dividend per share for the current financial year amounts to 2.2 sen, representing a 45.9 per cent payout based on FY23 earnings per share of 4.79 sen.
