KUALA LUMPUR (Dec 20): VS Industry Bhd’s net profit fell 19.31% to RM48.98 million for the first quarter ended Oct 31, 2023 (1QFY2024), from RM60.71 million in the previous year’s corresponding quarter, due to lower orders from key customers in Malaysia, China and Indonesia, which affected the group’s overall utilisation rate of production capacity. 

Earnings per share decreased to 1.27 sen from 1.58 sen in 1QFY2023. Revenue for the quarter declined by 10.91% to RM1.15 billion from RM1.29 billion, a filing by the electronics manufacturing services (EMS) provider showed on Wednesday. 

Despite the lower quarterly earnings, VS Industry declared a first interim dividend of 0.3 sen per share, payable on March 8, 2024. 

As at end-October, the group has a low net gearing of 0.09 times, backed by net assets of 58 sen per share and gross cash holdings of RM699.6 million. 

VS Industry managing director Datuk SY Gan commented that the group’s business environment is expected to remain challenging, as the economic landscape continues to exert pressure on its operational costs following increases in labour, utilities and financing expenses. 

“In this regard, management continues to adopt prudence in ensuring a lean and efficient operating structure to mitigate the impact of heightened costs on profitability. Furthermore, our operations are supported by our lean balance sheet with low net gearing and healthy cash flow, which would strengthen our agility to navigate any unforeseen issues,” he said in a statement. 

Regarding external demand, consumer spending has shown signs of “cooling” due to the sustained environment of high interest rates. This could potentially affect demand for the group’s key customers’ products, according to Gan. 

“On a positive note, the planned launches of several new models by certain customers of ours should serve to sustain market interest in the current financial year. All in all, the board opines that the financial performance of the group for the remaining quarters [will] be satisfactory,” he added. 

At Wednesday’s closing bell, shares of VS Industry were half a sen or 0.60% lower at 82.5 sen, giving it a market value of RM3.2 billion, with some 5.57 million shares exchange hands.