US-China row hits Hi-P Q3 profits

Singapore

MAINBOARD-LISTED contract manufacturer Hi-P International fell victim to the US-China trade war in the third quarter, according to unaudited financial results out on Wednesday.

The group's net profit fell 11.9 per cent on the previous year, to S$33.8 million for the three months to Sept 30, in line with a 8.3 per cent drop in revenue, to S$377.1 million.

Hi-P, which houses most of its factories in China, cited weaker demand from the trade war as one reason for the decline. Customers in the United States who get supplies from China were affected, said chief executive Yao Hsiao Tung in a media statement.

Other factors behind the slide in turnover included fewer projects with a high component content, a slower ramp-up for some new products, and the pushing back of billing for some tools to the next quarter.

The group said that it was "aggressively pursuing business development initiatives to expand the group's customer base in Europe and Asia".

According to its annual report, about 59 per cent of last year's revenue came from China, while another 24 per cent was from the Americas.

"We are exploring ways to boost our domestic China and non-US business and optimise our other existing manufacturing sites based in different countries," added Mr Yao.

Hi-P is also looking at mergers and acquisitions to grow outside China.

Earnings per share slipped to 4.19 Singapore cents, compared with 4.76 Singapore cents the year before.

For the nine months, net profit was down by 9.2 per cent, to S$56.1 million, although revenue ticked up by 2.7 per cent, to S$960.2 million.

The board recommended an interim dividend of one Singapore cent, half of what was paid out a year prior.

But the group guided, in its outlook statement, for a year-on-year decrease in revenue and profit for both the fourth quarter and the full year.

Hi-P shed S$0.035, or 4.35 per cent, to S$0.84, before the announcement.