Venture reports 3Q18 net profit fell 28 percent on customers’ product changes

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Venture Corp. reported on Friday that its third-quarter net profit fell 27.5 percent on-year to S$80.8 million, mainly on customers’ planned transition to replacement products and some customers’ mergers and acquisitions (M&A) activity.

Revenue for the quarter ended 30 September fell 27.4 percent on-year to S$770.4 million, the contract manufacturer said in a filing to SGX after the market close on Friday.

Its profit before tax margin was 12.3 percent for the quarter, down from 12.4 percent in the year-ago quarter, while the net margin was steady at 10.5 percent, Venture said.

Research and development expenses for the quarter rose 58.3 percent on-year to S$18.70 million, it said.

For the nine-month period, net profit rose 14.2 percent on-year to S$262.4 million, despite revenue falling 11.6 percent on-year to S$2.58 billion, as its net margin for the period increased to 10.2 percent from 7.9 percent in the year-ago period, it said.

“The improved net margin reflects the group’s ability to deliver deep value creation, continuous drive for operational excellence and manage an efficient operating model,” Venture said.

Outlook

Venture issued a mixed outlook, expressing optimism on orders, combined with concern over trade tensions.

“The group anticipates that new product introductions from several customers are expected to drive healthy revenue improvement sequentially in the next quarter,” Venture said.

“The group also expects to capture revenue contribution from several new customers in the next quarter, with improving traction in subsequent reporting periods. Furthermore, customers’ M&A transitions are still in progress and the group believes that business momentum should pick up again after the M&A integration processes are completed,” it added.

While the current trade tariffs aren’t affecting its business materially, a major trade-war escalation could create new macroeconomic risks, Venture said.

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