SINGAPORE (March 1): Serial System, the distributor of electronic components and consumer products, reported FY18 earnings rose 85% to US$17.7 million ($23.9 million) from a year ago on higher revenues and margins while an asset sale yielded a one-time gain.
The higher bottomline translates into fully diluted earnings per share of 1.97 US cents for FY18, compared to 1.07 US cent for FY17.
Revenue hit an all-time hight of US$1.53 billion in FY18 from a year ago with higher sales of electronic components, especially in Taiwan, South Korea and China, offsetting slightly lower contributions from consumer products distribution.
Serial System says trade tensions between China and the US and the termination of the distribution business with Texas Instruments (TI) have impacted the growth of the electronics distribution business in China and Hong Kong in 3Q18 and 4Q18 which otherwise would have grown strongly in the 1H18.
Overall gross profit margin edged up 7.8%, the highest in four years, from 7.0% as the group focused on more profitable electronic components and consumer products.
Besides higher revenue and profit margins, the group’s bottomline was boosted by a US$1.7 million write-back of inventory obsolescence, a 65% decline in allowances for impairment losses on trade receivables, as well as a US$18.3 million gain from the sale of its entire 27.34% stake in laundry firm SPL Holdings (Australia) in Sept 2018.
The group has proposed a final cash dividend of 0.46 cent a share. Together with an interim payout of 0.4 cent and a special dividend of 1 cent a share, the total amount shareholders can expect from its FY18 is 1.86 cents.
For 4Q18, the group reported earnings of US$0.2 million, down from US$0.4 million in 4Q17. This was mainly due to an adjustment to the gain on disposal of SPL, but partially offset by a reversal of an over-provision for tax in Singapore, lower impairment losses on trade receivables, a decline in distribution expenses, and a reversal of professional fees related to the proposed listing of a subsidiary in Hong Kong following the lapse of a listing application last November.
In its outlook, Serial System says it is reviewing its growth strategies, given the current uncertainty in the global economy, the competitive operating environment for electronic components distribution, the trade tensions between China and US, as well as the decision by TI to cease the distribution business with the group with effect from June 30.
“Some of the plans that have emerged from this review process have already been put into motion,” says Dr Derek Goh, the group’s Executive Chairman and CEO. These include a joint venture set up last month with LSD Science and Technology (Hong Kong) Co for the purpose of distributing electronic components in Hong Kong and China, as well as an investment for a 20% stake in Indonesia-listed PT Sentral Mitra Informatika, a provider of managed print services.
Shares in Serial System closed 0.1 cent lower at 8.1 cents on Thursday.
