Vicplas International 569 has reported earnings of $2.5 million for the 1HFY2023 ended Jan 31, 67.9% down y-o-y.
The lower earnings comes despite the 5% y-o-y growth in 1HFY2023 revenue of $66.4 million, which was offset by the lower other income and higher expenses for raw materials and consumables, purchase of finished goods for resale and employee benefits.
According to the group, the lower earnings was due to the impact on its medical devices segment, which was affected by the early Lunar New Year festival, which took place during the 1HFY2023.
Other operating expenses also grew.
During the 1HFY2023, other income fell by 41.8% y-o-y to $1.6 million mainly due to lower tooling income as customers in the medical devices segment postponed or delayed the commercialisation of some new projects on the back of the uncertain macroeconomic conditions.
The higher expenses was due to the higher revenue, inflationary pressures, higher headcount and increased overtime pay. Other operating expenses increased mainly due to costs associated with the new Changzhou plant extension and the potential new plant in Mexico. The higher expenses were also due to the higher marketing and travelling costs upon the reopening of borders.
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Earnings per share (EPS) stood at 0.48 cents on a fully diluted basis.
Cash and cash equivalents as at end-January stood at $6.7 million.
No dividend was declared for the period.
“Although we had increased orders, customers slowed the rate of new products going to market due to uncertain global macroeconomic conditions. Nevertheless, the medical devices segment continues to commercialise new projects and expand its global customer base in 1HFY2023 as it continues to build strong capabilities and expand its global manufacturing footprint to give customers more options in their supply chain. Our pipes and pipe fittings segment continues to improve in 1HFY2023 as construction activities picked up in Singapore and increased its segmental result due to supply improvements and its implementation of cost savings initiatives,” says group CEO Walter Tarca.
“As a group, we are keeping a close eye on the global economy given the uncertain global macroeconomic conditions, inflationary pressures, rising interest rates and geopolitical tensions. We are dealing with this challenging operating environment by focused execution of continuous improvement initiatives to drive operating costs down, whilst at the same time, investing in development and expansion initiatives. This will help us capture new business opportunities and enlarge our geographical footprint, in order to strengthen our base for future growth,” he adds.
Looking ahead, the group says it is adopting a “dual approach” where they will invest in continuous improvement initiatives to lower operating costs while “investing in development and expansion initiatives that will reap new business opportunities and strengthen its base for future growth with a wider geographical footprint”.
Shares in Vicplas closed flat at 18.3 cents on March 14.
