Medtecs full-year profit tumbles 87% to US$17.3m on lower PPE, face mask demand

PROTECTIVE gear manufacturer Medtecs International 546 on Tuesday (Mar 1) posted a net profit of US$17.3 million for the full year ended Dec 31, 2021, 87 per cent lower than the US$131.7 million posted in the year-ago period.

This was mainly due to decreased demand and margins for personal protective equipment (PPE) and facemasks, the company said in a bourse filing.

The results translate to earnings per share of US$0.03171 against earnings per share of US$0.23973 in the year-ago period.

The group's FY2021 results were consistent with a profit warning released on Feb 11. Medtecs said at the time that it expects to incur a loss for the fourth quarter and the second half year ended Dec 31, 2021.

This was due to inventory provisions for PPE amounting to US$3 million - arising from lower average selling prices for PPE. That being said, the company said it will still generate a net profit for the full fiscal year.

Revenue was down 64 per cent to US$144.2 million from US$400.3 million the year before due to lower PPE and face mask sales, after the build-up of stocks by most of Medtecs' customers in the previous year. PPE demand also fell in the later part of the year due to the slowdown of new Covid-19 cases worldwide.

Revenue from Medtecs' original product manufacturing division dropped by 67 per cent to US$117.9 million in the full-year period.

Meanwhile, revenue from the hospital services division increased slightly by 2.1 per cent to US$14.9 million in FY2021 due to higher service cost on linen consumption in Taiwan.

Revenue from trading, distribution and others tumbled by 64 per cent to US$11.2 million in FY202 due to lower demand, partially offset by increased e-commerce sales in Taiwan.

The board has recommended a final dividend of US$0.006 per share. The date for the dividend payment will be announced at a later date, subject to shareholder approval.

Looking ahead, Medtecs said it has expanded into business to consumer services and will leverage on the increased consumer awareness for its Medtecs and CoverU brands. It will seek collaboration and franchising opportunities, as well as tap on the network of its retail partners to broaden its customer base.

To keep pace with sustainability trends, Medtecs said it is exploring the possibility of entering the renewable energy market to create another growth driver. This includes, without limitation, investing in renewable energy together with external strategic partners to meet customer requests for more green manufacturing in the future.

"The company presently intends to focus on and evaluate the merits of solar power and energy storage services, including installation of solar panels in our existing factories," Medtecs added.

Shares of Catalist-listed Medtecs were closed 6.2 per cent or S$0.015 higher at S$0.255 on Tuesday, after release of the financial results.