Soft end-market demand takes toll even though revenue rises q-o-q
By OH BOON PING
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VENTURE Corporation yesterday reported a 50.8 per cent plunge in net profit to $27.7 million on a 23 per cent drop in turnover for the three months to March 31.
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| Watchful: Venture expects the remaining nine months of its financial year to stay challenging, as sentiment among customers remains cautious |
First quarter sales were $725.5 million, while diluted earnings per share dropped to 10.1 cents from 20.5 cents a year earlier.
At March 31 the group had $588.2 million in cash and cash equivalents - up from $414.58 million a year ago.
The contract manufacturer was hit by soft end-market demand, even though revenue improved quarter-on-quarter.
The decline in revenue was broad-based and relatively even across key segments. One exception was printing and imaging (P&I), where revenue rose 6 per cent year-on-year due to 'a shift to a full-product configuration model by a major P&I customer during the reporting quarter'.
Venture also took a fair- value loss of $12.6 million on its derivative instruments.
During Q1, subsidiary VIPColor successfully launched a new label printer that offers high-end print quality, speed and flexibility. 'This product has been well received in the marketplace,' Venture said.
The group also has several ongoing original design manufacturing (ODM) projects in collaboration with customers in all the market segments it operates in.
Its medical segment registered double-digit growth quarter-on-quarter and year-on-year. 'The group has built further traction in this segment and anticipates its current activities engendering stronger interest from existing and potential partners,' Venture said.
In Q1, the group made its maiden foray into the aerospace sector, with the addition of a reputable new customer.
Looking ahead, chief executive Wong Ngit Liong said Venture will focus on expanding its market share and value chain, and capturing new customers through differentiation and innovation.
The group aims to enhance its partnerships with customers, while building on its technology and a leaner cost structure.
Mr Wong said price-cutting will not be adopted because this is not a sustainable approach to growing the business. Instead, Venture will channel its efforts into value creation and new products. These new products include a barcode printer and a Micro PDA, among others.
Venture expects the remaining nine months of its financial year to stay challenging, as sentiment among customers remains cautious.
Its shares dropped 25 cents to close at $5.96 yesterday.
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