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Venture Corp declares surprise dividend; net profit up 40% in Q2

MARGIN expansion from more research and development (R&D) work helped Venture Corp make up for a revenue shortfall in the second quarter, lifting the group’s net profit in line with street estimates.

The electronics manufacturing services (EMS) firm posted a net profit of S$97.9 million in the second quarter, up 40.2 per cent from the same period a year earlier.

Revenue in the three months ended June 30 was S$952.3 million, down 6 per cent.

Net profit margin was 10.3 per cent, up from 6.9 per cent in the second quarter last year.

R&D expenses incurred from prototyping, tooling and other services rose 372.1 per cent to S$34.4 million, from S$7.3 million in the second quarter last year. R&D revenue is recognised together with costs.

Venture also announced a surprise interim dividend of 20 Singapore cents a share, payable on Sept 19. There was no interim dividend last year. Venture typically pays only a final dividend in May.

The last time that Venture rewarded shareholders with a special dividend was in 2007, when earnings had peaked.

The company said in its filing to the Singapore Exchange: "While Venture has delivered a creditable performance in the first half of 2018, some volatility may arise in the near term from customers’ mergers and acquisitions, new product/platform transitions and also from the possibility of escalation of trade war and component shortages.

"Venture and its partners have worked out various strategies to mitigate these issues."

Net cash as at June 30 was S$646.9 million.

Second-quarter earnings per share was 34.1 Singapore cents, up from 24.7 Singapore cents in the same period last year.

Net asset value per share was 767.5 Singapore cents as at June 30, from 760.9 cents as at Dec 31 last year.

The results briefing was closed to media. Chairman and chief executive Wong Ngit Liong had “decided to adopt a new approach” and a new head of corporate communications will join the company towards the end of the month, The Business Times was told.

Venture shares closed 0.18 per cent higher at S$16.85 on Friday before results were published after market close.