Contract manufacturer Valuetronics reported Wednesday its fiscal first half net profit dropped 38.1 percent on-year to HK$56.6 million as supply-chain disruptions caused severe component shortages and the loss of an automotive customer.
Revenue for the April-to-September period fell 7.3 percent on-year to HK$1.01 billion, the company said in a filing to SGX.
The gross profit margin declined 2.8 percentage points on-year to 14.2 percent for the six-month period, Valuetronics said.
“Severe shortages of certain key electronic components have affected the group’s ability to meet orders, leading to a decline in revenue and a corresponding decrease in profit, this situation will continue to affect us in the near term,” Ricky Tse Chong Hing, chairman and managing director of Valuetronics, said in the statement.
ICE segment loses automotive customer
The industrial and commercial electronics segment posted a 7.3 percent decline in revenue to HK$695.1 million for the fiscal first half, as an automotive customer switched their production from the group’s factor to another vendor in North America.
“The fulfilment of certain ICE customers’ orders was also affected by the components shortage, but this was offset by revenue growth from a printer customer benefitting from e-commerce sales and a sensing devices customer benefitting from their product’s application in the logistics industry,” Valuetronics said.
The consumer electronics segment posted fiscal first half revenue fell 4.8 percent on-year to HK$319.4 million, mainly on cancellation and deferral of customer orders due to the component shortage.
Valuetronics declared a first half dividend of 4 Hong Kong cents, compared with 5 Hong Kong cents in the year-ago period.
Chairman Tse was upbeat on the Vietnam campus, which was expected to go into mass production by the end of fiscal 2022, or end-March, after passing inspections and assuming the Covid-19 situation in Vietnam doesn’t worsen.
“There have been positive responses from potential customers regarding our regional manufacturing footprint strategy, and we are cautiously optimistic about revenue contributions from these new opportunities in the financial year ending 31 March 2023,” Tse said.
The company said the components shortage would continue to affect its ability to fulfill customer orders, and the strong yuan and increasing operating costs in China would continue to erode profit margins in the near term.