VS Industry warns of weaker profit on declining orders
TheStar
Fri, Dec 14, 2018 - 1 hour ago
KUALA LUMPUR: VS Industry Bhd
warned its profit outlook for the coming quarters has weakened as its
operations in Malaysia is affected by declining order flow from a key
customer.
Meanwhile, the group’s factories in China remained under-utilised
“Given the aforementioned circumstances, the board opines that the
financial performance of the group in the second half of the financial
year ending July 31, 2019 (FY19) will be affected by the anticipated
lower sales order,” it said.
The integrated electronics manufacturing services company, in a
filing with Bursa Malaysia on Friday, said net profit in the first
quarter ended Oct 31 fell 7% to RM39.8mil on flatish revenue of
RM1.07bil.
VS Industry expects growth in the first half of the year to be
driven by existing order flow, but the company warned that demand is
tapering off.
“Prospects in the second half of current financial year are
expected to weaken as we anticipate order flow from a key customer to
decline,” it said.
“This would, in turn, affect our level of profitability.”
VS Industry has been aggressively expanding its local manufacturing
facilities over the past year, with new assembly lines targeted to come
on stream over the next 12 months.
The company has recently acquired a RM28mil new factory, which has
the capacity of eight assembly lines, while the construction of a
RM70mil new facility with a total of 12 assembly lines is almost
completed.
To fill up excess capacity at its local facilities, the company
said it is “in serious discussions” with several prospective
multinational companies (MNC) customers to secure new orders.
“Over in China, the outlook appears to be difficult at this juncture given the uncertainties that include the US-China trade war, rising operating cost structure and intense competition,” it said, adding that the issue of under-utilisation of capacity is expected to prevail at this juncture.
