Venture reports 2Q19 net profit fell 7 percent

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Venture Corp. reported Thursday its second quarter net profit fell 7 percent on-year to S$90.81 million amid higher depreciation costs and as margins fell.

Revenue for the quarter ended 30 June fell 5.1 percent on-year to S$903.48 million, the contract manufacturer said in a filing to SGX.

That translated to a net margin of 10.1 percent for the second quarter, down from 10.3 percent in the year-ago period, Venture said.

Maybank KimEng said in a July note that second quarter earnings might miss expectations as customers were transitioning their products, which may result in an “air pocket” for revenue. But the brokerage noted that Venture should be a beneficiary of the U.S. trade war over the next one to two years as around 85 percent of its production is located in Malaysia, Singapore and the U.S.

“While VMS has noted increased caution among customers, it has not yet observed signs that new products slated for launch in the second half of 2019 will be delayed,” the brokerage said.

Depreciation and amortization expense increased 15.5 percent on-year to S$8.79 million on changes to accounting for leases, Venture said.

The foreign currency exchange gain was S$1.35 million for the quarter, down 45.4 percent on-year, Venture said.

Venture declared an interim dividend of 20 Singapore cents a share, unchanged on-year.

For the first half, Venture reported net profit edged up 0.1 percent on-year to S$181.68 million on revenue of S$1.83 billion, up 1.3 percent on-year.

“Revenue for the first half of 2019 held steady as the group’s diversified portfolio of customers provided resilience against headwinds from geopolitical and macroeconomic factors,” the company said.

Venture issued an cautious outlook.

“The outlook continues to be shrouded by escalating geopolitical tensions and the prolonged trade war, which has adversely impacted the global economy and world trade. Venture anticipates the volatile environment to persist, but the group has in place several initiatives to help it navigate this dynamic environment,” the company said.

Venture said it would continue to diversify its operations in selected domains.

“Strong emphasis will be placed on building new differentiating capabilities to enhance the group’s competitiveness. And with its
strong financial resources, Venture is well placed to capture growth opportunities as and when they arise,” the company said.

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