Valuetronics FY2020 net profit falls 10.3% to HK$178.9m on lower revenue

VALUETRONICS Holdings posted a 10.3 per cent drop in net profit to HK$178.9 million (S$32.3 million) for its full year ended March 31, 2020, from HK$199.5 million a year ago.

This came as the mainboard-listed electronics manufacturer recorded lower revenue for both its industrial and commercial electronics segment and consumer electronics segment.

Earnings per share stood at 41.2 Hong Kong cents for the year, down from 46.2 cents a year ago, according to the group's results released on Wednesday.

Revenue for the full year fell 16.8 per cent to HK$2.35 billion, from HK$2.82 billion a year ago. A slowdown in demand from customers was the main reason for Valuetronics' industrial and commercial electronics revenue falling 13.7 per cent to HK$1.44 billion, while consumer electronics revenue declined 21.1 per cent to HK$916 million.

A final cash dividend of 14 Hong Kong cents per share has been recommended for the full year, compared with 15 cents a year ago.

The group had paid an interim dividend of six cents in December 2019, bringing the total dividend amount to 20 cents for FY2020.

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This amount is 48.5 per cent of the net profit attributable to shareholders for fiscal 2020, in line with the company's formal dividend policy of paying out between 30 per cent and 50 per cent of net profit as normal dividends.

The date on which the dividend will be paid out will be announced at a later time.

In FY2019, the group paid an aggregate dividend of 25 cents, comprising an interim dividend of five cents, a final dividend of 15 cents, and a special cash dividend of five cents.

On the Covid-19 outbreak in China, Valuetronics said stringent measures imposed by the Guangdong provincial government had led production to recover at a slower-than-normal pace post-Chinese New Year (CNY).

The group had deferred its original post-CNY resumption to mid-February 2020 due to government restrictions.

When the group's China operations began normalising gradually in mid-March, the pandemic worsened in Europe and North America.

As a result, some of Valuetronics' customers temporarily shut down their operations in response to lockdowns by their respective governments, creating an "adverse demand-side shock" affecting orders across all segments since March 2020.

That being said, the group's expansion to Vietnam is progressing as planned, with its first leased manufacturing facility in Hanoi successfully launching trial production in May 2020.

Valuetronics said it is encountering the "toughest business environment in its operating history".

In its outlook for FY2021, the group said it is "highly uncertain" as the group is facing an unprecedented crisis affecting the entire world amid the backdrop of the Covid-19 pandemic and Sino-US trade tensions.

Although a series of precautionary and control measures for lowering operating costs are being carried out to mitigate the impact, Valuetronics said its FY2021 financial results are expected to be significantly lower compared with FY2020.

Valuetronics shares were down 4.5 Singapore cents or 6.6 per cent at 63.5 cents during Wednesday's midday trading break.