Electronics Manufacturing Services (EMS) provider in Malaysia, V.S. Industry Bhd its revenue for the quarter under review (1QFY22) for the period ended October 31, 2021, stood at RM968.0 million versus RM987.1 million, a marginal decline of 1.9% year-on-year (YoY).
This was largely due to lower contribution from the operations in Malaysia with lower orders for Printed Circuit Board Assembly (PCBA) in 1QFY22, coupled with disruption to component supply. The impact was partially offset by higher production of box-built assembly for a new customer.
Meanwhile, the Group posted a profit after tax and non-controlling interest (PATNCI) of RM39.4 million in 1QFY22 as compared to RM66.7 million in the previous year corresponding quarter. The drop was chiefly attributed to a combination of factors for its Malaysian operations that included an increase in labour and raw materials costs, higher depreciation from new facilities, setup costs for the Industrial Vaccination Centre (PPVIN) under the PIKAS initiative at one of the VS factories and the vaccination cost for the entire workforce. Besides, mass production for a new key customer has commenced during the quarter under review but has yet to achieve optimal level. This, along with disruptions to supply chain, had led to lower operational efficiency.
Managing Director of VS, Datuk S.Y. Gan said, “The current challenging operating environment brought about by the Covid-19 pandemic and geopolitical uncertainties, among others, are expected to prevail. The much talked about disruption in the global supply chain has also resulted in component shortage and longer lead time, affecting many industries including electronics manufacturing services. In addition, the Group faces some pressures given the rising cost environment.”
“On a brighter note, there are several positive catalysts in favour of the Group. Overall demand by customers remains robust and is largely expected to sustain in the coming quarters. The Group is also currently in advanced discussion with key customers on potential new orders, which if materialize, will contribute to future earnings. At the same time, the business development team continues to receive enquiries from prospective multinational corporation (“MNC”) customers and are following up on some shortlisted names.”
“In terms of labour adequacy, efforts are ongoing since last year to step up hiring of locals following the ban on bringing in foreign workers. The overall situation, while challenging, is manageable at this juncture. We continue to comply with all government regulations with regards to our foreign workers. We have also passed the latest audit checks by the Responsible Business Alliance or RBA, as well as by our key customers with no material issues highlighted. The Group is also in dialogue with Migrant Worker Rights Specialist, Mr. Andy Hall, on areas of fruitful cooperation into the future to enhance the welfare of migrant workers at the company.”
