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Venture’s H1 net profit down 28.2%; interim dividend raised

MAINBOARD-LISTED Venture Corp posted a 28.2 per cent fall in net profit to S$130.5 million for the six months ended June, as some customers pushed back orders amid the Covid-19 pandemic.

Nevertheless, the electronics manufacturing services provider declared an interim dividend of S$0.25 per share, up from S$0.20 per share a year ago. The dividend will be paid on Sept 18.

H1 revenue fell 25.5 per cent to S$1.37 billion, hit by supply chain disruptions and factory lockdowns in Malaysia, Spain, US and China, due to the Covid-19 pandemic. In addition, orders from some customers in non-essential, end-market segments were pushed back to later quarters.

But in tandem with the lower revenue, changes in finished goods, work in progress and raw materials costs also fell, cushioning the impact on the bottom line. The firm also recorded a S$3.1 million foreign currency exchange gain, up from S$1.22 million a year ago.

Overall net operating cash flow for H1 also strengthened to S$252.1 million, up from S$205.1 million a year ago. Venture was in a net cash position of S$833 million at end-June.

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Venture’s working capital position improved on the back of a lower net receivables and payables position. This was offset by higher inventories to enable continuous support for customers’ programmes.

“Notwithstanding revenue headwinds from this unprecedented situation, the group delivered strong sequential quarterly recovery underpinned by resiliency from a diversified customers’ portfolio and nimble adaptability to business changes,” Venture said of its performance.

For Q2, Venture’s net profit stood at S$70.2 million, down from the S$90.8 million bottom line a year ago. This came as Q2 revenue fell to S$692.7 million, compared to S$903.5 million for the same period last year.

Net margins remained relatively robust at 10.1 per cent for Q2, unchanged from a year ago, and 9.6 per cent for H1, down by 0.3 percentage points.

Looking ahead, Venture said that it continues to see sustained demand from customers in the life science, medical devices and equipment, networking and communications and semiconductor-related equipment domains. It is also fulfilling orders from non-essential domains as global economies reopen.

The company added: “The steady recovery seen in Q2 2020 is expected to continue into the second half of this year. Venture’s R&D labs have plans to subsequently release a number of newly developed products into manufacturing commencing early 2021.”

Shares of Venture closed at S$18.84 on Friday, down 0.69 per cent ahead of the results.

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