SINGAPORE (May 29): Valuetronics Holdings, the provider of electronics manufacturing services (EMS), announced a 2.8% y-o-y decline in FY19 earnings to HK$199.5 million ($35.1 million) from HK$204.7 million on lower revenue.
A final dividend of 15 HK cents, along with a special dividend of 5 HK cents, has been recommended for FY19.
Including the HK 5-cent interim dividend paid out to shareholders in Dec 2018, this year’s interim, special and final dividends amount to 25 HK cents per share or 54.4% of FY19 net profit attributable to shareholders.
Group revenue for FY19 dipped 0.9% to HK$2.8 billion from HK$2.9 billion as contributions from the consumer electronics (CE) segment declined due to weaker sales in smart lighting products as its customer expanded its supply chain beyond China.
Valuetronics says CE revenue contribution from consumer lifestyle products nonetheless remained stable over the financial year, with “no obvious signs and impact” from its customer’s diversification plan from the China supply chain.
In all, the decline in CE segment revenue was offset by double-digit growth from the industrial and commercial electronics (ICE) segment due to higher demand from certain customers including those in the printer and automotive industry, as well as new customers featuring IoT products.
Selling and distribution expenses grew by 9.4% to HK$41.5 million on the back of higher commission expenses, while administrative expenses grew by 9.7% to HK$177.2 million due to higher staff costs.
FY19 gross profit margin rose to 15.2% from 14.5% in FY18, resulting from the change in product sales mix during the current financial year.
A net other operating loss of HK$13.6 million was also booked over FY19 compared to none a year ago, due to the impact of a flash flooding incident on Danshui Factory.
Valuetronics has since made an insurance claim for the damages suffered, and is in the midst of working with the insurer’s lost adjuster on the insurance claim.
In its outlook, the group says escalating trade tensions between the US and China has prompted more customers to diversify their procurement strategies by adopting and/or evaluating options for assembling products outside of China in their bid to mitigate their risks.
As such, Valuetronics has been rolling out initiatives to expand its manufacturing footprint out of China, adding that it is currently in discussions to explore manufacturing solutions at a possible manufacturing site in Vietnam.
The group says it may further expand its Vietnam production capacity by building its own manufacturing facilities as well.
“As trade war tensions between the US and China continue, we have identified Vietnam as a location to expand our production outside of China. We expect one of our customers to qualify our initial set up in Vietnam by end of June 2019, followed by mass production for shipment from Vietnam to the US market. ”
As at 10:55am, shares in Valuetronics are trading 2 cents higher at 62 cents.
