Valuetronics Q2 net profit dips 8.4% on slower consumer electronics business

MAINBOARD-listed Valuetronics Holdings' net profit for the second quarter fell 8.4 per cent to HK$36.3 million (S$6 million) from a year ago due to slowdown in demand for consumer electronics and higher staff costs.

Revenue over the period fell by 0.7 per cent to HS$627.6 million from HK$632.0 million, said the firm in an announcement to the Singapore Exchange.

While the consumer electronics business saw topline dip 11 per cent to HK$402 million, the firm's industrial and commercial electronics (ICE) managed to hold up well, rising 25 per cent to HK$225 million. "Our focus on developing the ICE segment has certainly paid off," said Valuetronics chairman and managing director Ricky Tse Chong Hing.

Business conditions in the consumer electronics segment remained tough, particularly in the LED lighting business. "Customers in the segment continued their aggressive pricing strategies in introducing lower priced products, and such a trend is unlikely be reversed in the near future," said the firm, adding that pricing pressures will continue to adversely impact the group's margins. "This impact cannot be fully offset by greater in-house operational efficiency and supply chain productivity," it added.

Besides cutting prices, some brand owners in the LED lighting business are also making major plans to restructure their businesses amid a challenging environment. To mitigate margin erosion in the consumer electronics segment, Valuetronics said it will stay alert amid fast-changing trends and "proactively manage its reliance" on this segment.