KUALA LUMPUR (Nov 19): Cape EMS Bhd (KL:CEB) booked its first quarterly loss since its listing in March 2023, with a net loss of RM18.95 million in the third quarter ended Sept 30, 2024 (3QFY2024), compared with a net profit of RM15.21 million in the same quarter last year.

In a bourse filing on Tuesday, the company attributed the losses to a reduced gross profit margin, impacted by customers’ cost down for both industrial and consumer electronic products, particularly on wireless communication equipment and electronic cigarettes.

This was despite a 4.4% higher revenue of RM141.95 million, compared with RM135.98 million previously, the group stated.

The losses were also contributed by the unrealised foreign exchange loss of RM12.6 million due to strengthening of the ringgit, amortisation of intangible assets of RM4.4 million as well as the impairment loss on trade receivables of RM2.2 million during the current quarter.

Basic loss per share for the quarter came in at 1.91 sen, compared with an earnings per share of 1.65 sen a year earlier. The group did not declare dividends for the quarter under review.

In the nine-month period ended Sept 30, 2024, Cape EMS’ net profit plunged to RM3.16 million, compared with RM38.88 million recorded in the same period last year. Cape EMS’ results have been declining since the second quarter ended June 30, 2024.

Meanwhile, revenue for 9MFY2024 rose 17.2% to RM463 million from RM395.1 million.

Cape EMS had also resolved to undertake the variation and to extend the timeframe for the utilisation of its IPO proceeds for another six months, until May 18, 2025. It raised RM155.7 million through its IPO in March last year.

As of Nov 19, 2024, Cape EMS and its subsidiaries have utilised approximately RM38.39 million from the total IPO proceeds.

The group says that it has allocated RM62.81 million for the setting up of a new cleanroom facility and purchase of new automated production lines for EMS operations. However, it has not utilised this allocation, as of Sept 30, 2024.

“As there is growing needs for funding support on the existing businesses, the company reallocated RM36 million from the setting up of new cleanroom facility and purchase of new automated production lines for EMS operations to working capital to cater for such needs,” the group stated.

Moving forward, the group cited ongoing macroeconomic challenges, including fluctuating exchange rates and elevated administrative expenses, which it aims to address through operational optimisations and cost management strategies.

“With iConn Inc integrated into our group, we are transitioning to an asset-light manufacturing model, incorporating both online and offline capabilities to increase efficiency, reduce capital expenditures, and enhance our responsiveness to the evolving market landscape.

“We are expanding into green technology solutions, particularly in battery pack manufacturing, to meet the growing demand for sustainability and reinforce our commitment to environmental responsibility,” the group stated.

Cape EMS’s share price closed down half a sen or 1.32% to 38 sen, bringing the group a market capitalisation of RM377.15 million. Year-to-date the stock has fallen 63.68%.