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Valuetronics' Q3 net profit down 36% on lower sales of LED lighting products
VALUETRONICS on Wednesday posted a 35.8 per cent drop in net profit to HK$25.2 million (S$4.6 million) for its third quarter ended Dec 31, 2015.
This is the third quarter that it has posted year-on-year declining earnings.
Revenue fell 27.1 per cent to HK$434.5 million, due to a sharp fall in revenue in its consumer electronics segment.
Valuetronics is an electronic manufacturing service provider. It designs and develops products for brands in the consumer electronics (CE) and industrial and commercial electronics (ICE) sectors.
In the latest quarter, its CE segment was hit badly by falling sales of LED lighting products, down 61 per cent, as mass-market LED light bulbs have reached their end-of-life cycle, it said. But this was partly offset by turnover in its ICE segment which grew about 25 per cent.
Ricky Tse, chairman and managing director of Valuetronics, said: "I am happy that our ICE segment revenue continues to grow, as our CE segment adjusts with a lesser contribution from LED lighting products.
"We have been scaling back the mass market LED light bulb business over the past few quarters and while this has naturally impacted our overall revenue and profit, our gross profit margins have improved as a result."
The group has completed all the orders of mass market LED light bulbs and has since ceased producing them, it said. With this, the CE segment's revenue will now comprise products with consumer applications for a portfolio of customers, it added.
In Q3, Valuetronics benefited from a widened customer base in the ICE segment. On top of existing customers, it also enjoyed a new revenue stream from the production of electronic products for the automotive industry.
Moving ahead, the group said it remains mindful of factors that could impact its business, such as a stronger US dollar, a depreciating yuan, and a further slowdown in China's economy.