Hi-P International reports 4Q18 net profit fell 25 percent amid price competition

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Contract manufacturer Hi-P International reported on Thursday its fourth quarter net profit fell 24.9 percent on-year to S$44.77 million as uncertain market conditions hurt demand from some customers and amid more pricing competition.

Revenue for the quarter ended 31 December declined 10.2 percent on-year to S$441.90 million, it said in a filing to SGX after the market close on Thursday.

Administrative expenses for the quarter increased 26 percent to S$22.70 million amid higher labor costs, it said.

For the full year, it reported net profit fell 16.9 percent on-year to S$100.95 million on revenue of S$1.40 billion, down 1.7 percent on-year.

The gross profit margin for the full year declined 1.7 percentage points to 14.6 percent, mainly on price competition, rising labor costs and lower manufacturing yield for certain new products in the initial ramp up phase, Hi-P said.

Yao Hsiao Tung, executive chairman and CEO, said the company was able to achieve positive results as it worked to improve productivity.

“The trade war environment has been challenging,” said Yao said in the statement. He added the company has taken steps to ensure sustainability and profitability so it won’t be impacted long term.

“We are aggressively fighting for more projects, increasing our allocation with existing customers and diversifying our customer base in new regions such as China, Northeast Asia and Europe. Furthermore, we are working on expanding into areas such as the automotive, medical and IoT ecosystem segments,” Yao said.

He added Hi-P was expanding its operations outside of China, including to Thailand, and exploring M&A opportunities to speed those efforts. Hi-P currently has 12 facilities on the mainland.

Hi-P said it expected revenue and profit for the current year to be similar to 2018.

The company proposed a final dividend of 4.0 Singapore cents, unchanged from a year earlier, bringing the year’s total dividend to 5.0 Singapore cents.

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