KESM’s earnings plunge in Q2

PETALING JAYA: KESM Industries Bhd’s net profit for the second quarter ended Jan 31 plunged 95.76% to RM474,000 from RM11.18 million a year ago due to a 78% drop in other income during the quarter.

In a filing with Bursa , the group said that other income was lower during the quarter due to lower gain on disposal of machinery spares of RM300,000 and absence of government grant of RM300,000.

During the quarter, interest income rose 78% following higher placements of short-term deposits while raw materials and consumables used and changes in inventories of finished goods and work-in-progress rose 59% to support the increased electronic manufacturing services (EMS) revenue from new customers.

Employee benefits expense was lower by 12% following the alignment of staff costs to operational requirements while other expenses were lower by 5% due to lower management fees as well as lower repairs and maintenance as a result of lower revenue from burn-in and testing services.

Revenue for the quarter fell 11.33% to RM81.11 million from RM91.47 million a year ago due to lower demand for burn-in and testing services, offset by higher revenue from rendering of EMS to new customers.

For the six months ended Jan 31, KESM’s net profit fell 86.19% to RM3.12 million from RM22.55 million a year ago while revenue fell 10.71% to RM162.66 million from RM182.18 million a year ago.

Moving forward, the group said it remains well positioned to weather through momentary market softening, despite the weaker performance due to tighter inventory control measures instituted by customers.

It noted that the broad indices of the and the are pointed towards a softening momentum while global economy for 2019 is projected to grow 3.5%, lower than 2018 by 0.2%.

Source: The Sun Daily

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