KUALA LUMPUR: VS Industry Bhd’s net profit shrank to RM39.39 million for the first quarter ended Oct 31, 2021 (Q1 FY22) from RM66.68 million in the same period last year due to lower printed circuit board assembly orders received by its Malaysian operations as well as component supply disruption.

The Johor-headquartered company, one of the world’s leading electronics manufacturing service (EMS) providers, also saw its revenue slip to RM968.0 million from RM987.1 million previously.

The Malaysian segment’s pre-tax profit fell 45.3 per cent year-on-year to RM50.38 million in the quarter under review, it said in a filing with Bursa Malaysia today.

Factors that weighed on the segment’s performance included an increase in labour and raw material costs, higher depreciation from new facilities, setup costs for the Industrial Vaccination Centre (PPVIN) under the PIKAS initiative at one of its factories, as well as the vaccination cost for the entire workforce.

“Besides, mass production for a new key customer has commenced during the quarter under review but has yet to achieve optimal level.

“This, along with disruptions to supply chain, had led to lower operational efficiency,” the company said.

VS Industry declared a first interim dividend of 0.4 sen per share for the quarter under review (Q1 FY21: 1.2 sen), payable on March 4, 2022.

In a separate statement, managing director Datuk S.Y. Gan said disruptions in the global supply chain had resulted in component shortage and longer lead time, hence affecting many industries, including EMS.

“In addition, the group faces some pressures given the rising cost environment,” he said, adding that he expected the current challenging operating environment brought about by the COVID-19 pandemic and geopolitical uncertainties to prevail.

On a brighter note, Gan pointed out several positive catalysts in favour of the group, which included robust demand that was largely expected to sustain in the coming quarters.

“The group is also currently in advanced discussions with key customers on potential new orders which, if materialised, will contribute to future earnings.

“At the same time, the business development team continues to receive enquiries from prospective multinational corporation customers and are following up on some shortlisted names,” he said. – Bernama

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