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Wednesday, June 3, 2020

Valuetronics FY20 earnings fall 10.3% to $32.5 mil on lower customer demand due to 'toughest business environment' since history

Felicia Tan 3/06/2020, 8:23am

SINGAPORE (June 3): Valuetronics Holdings, the provider of electronics manufacturing services (EMS), announced a 10.3% y-o-y decline in FY20 earnings to HK$178.9 million (S$32.5 million) from HK$199.5 million. This is attributable to an overall lower customer demand owing to the global Covid-19 pandemic, escalating Sino-US trade tensions, and an overall global economic downturn.

In a statement on Wednesday, the company says it is encountering the “toughest business environment” since its operating history.

A final dividend of 14 HK cents per share has been proposed.

Including the HK 6-cent interim dividend paid out to shareholders in December 2019, the full dividend for FY20 amounts to 20 HK cents per share, or 48.5% of the net profit attributable to shareholders. This remains in line with the company’s formal dividend policy of paying out between 30% to 50% of net profit as normal dividends to shareholders.

Group revenue for FY20 fell 16.8% y-o-y to HK$2.35 billion from HK$2.83 billion.

Gross profit declined 15.7% to HK$362.8 million, with gross profit margin up by 0.2 percentage points to 15.4% for FY20 attributable to a change in sales mix for the year under review.

Revenue from its Consumer Electronics (CE) segment fell 21.1% to HK$916 million. Revenue from its Industrial and Commercial Electronics (ICE) segment declined 13.7% y-o-y to HK$1.44 billion.

The decline in both segments are mainly due to the slowdown in demand from customers.

Valuetronics’ other income fell 7.5% y-o-y to HK$24.7 million mainly owing to the increase in interest income.

Selling and distribution expenses fell by 36.5% to HK$26.3 million on the back of lower commission expenses, and the write back of provision of sales returns and claims amounting to some HK$4.3 million.

Administrative expenses fell by 7.4% to HK$164.1 million due mainly to cost control measures.

As at March 31, cash and cash equivalents stood at HK$1.05 billion.

Looking ahead, the company says outlook for FY21 is highly uncertain on the back of the Covid-19 pandemic and the Sino-US trade tensions, and it expects “significantly lower” financial results for the year.

“With COVID-19 pandemic and the Sino-US trade tensions, the outlook for FY2021 is highly uncertain. This is the toughest business environment we have faced in our operating history and while we try to mitigate its impact, our FY2021 financial results will be adversely affected,” says Ricky Tse Chong Hing, chairman and managing director of Valuetronics.

“Nevertheless, I have confidence in my team and our operating discipline. Our strong balance sheet has allowed us to build up our Vietnam capacity quickly and this will help us to cater to our customers’ changing supply chain needs,” he adds.

Valuetronics shares closed 3 cents higher, or 4.6% up, at 68 cents on Tuesday.

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