Hi-P International posts 50% slide in Q4 net profit of S$22.4m

MAINBOARD-LISTED contract manufacturer Hi-P International, hit last year by both a tech-related trade war and a cyclical drop in the global electronics industry, saw its fourth-quarter earnings halved, according to unaudited results released on Thursday.

Net profit fell to S$22.4 million for the three months to Dec 31, 2019, down from S$44.8 million in the same period the year before, with revenue down by 10.2 per cent to S$396.9 million.

Besides the drop in turnover, which came on the back of price pressures and lower sales volume for some customers, the bottom line was also done in by a fall in interest and other income, and a widening share of associates' losses.

Meanwhile, the decrease in other income was on the lack of a one-off gain from the same period the year before, which came on the dilution of Hi-P's interest in Hi-Flex (Suzhou) Electronics Co, which is engaged in the flexible printed circuit board business.

Earnings per share was down to 2.79 Singapore cents for the quarter from 5.56 cents before, while net asset value was 73.80 Singapore cents a share against 70.44 cents previously.

For the full year, net profit was down by 20.4 per cent to S$80.3 million, on a 2.5 per cent decrease in revenue to S$1.37 billion.

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Hi-P, which has 13 manufacturing plants in five Chinese sites, noted that these factories were closed from Feb 3 to Feb 9 amid the deadly Covid-19 outbreak in mainland China.

But Yao Hsiao Tung, Hi-P's chairman and chief executive, said in an outlook statement that "the extent of any financial impact is difficult to ascertain as the situation continues to evolve, causing disruptions across global supply chains, including suppliers and final assemblers".

That's even as some customers have asked Hi-P to move some operations out of China, which has affected operations alongside the impact of price erosion on the bottom line, he added.

Hi-P has guided for higher revenue but lower profit in FY2020, compared with FY2019.

The board has recommended a final dividend of S$0.02 a share, down from S$0.04 in the year prior, with the books closure and payout dates to be announced later.

Hi-P shares closed down S$0.05 or 3.7 per cent to S$1.30 on Thursday before the results were announced.