CONSOLIDATED INCOME STATEMENT
January – March 2018 ("1Q18")
The Group's revenue decreased 1.6% year-on-year ("yoy") from $171.8 million for 1Q17 to $169.0 million for 1Q18. Overall revenue was impacted by the weakening of the US Dollar against the Chinese Renminbi, Malaysian Ringgit and Singapore Dollar, partially offset by the strengthening of the Euro against these currencies.
The Group reported an increase in revenue from all business segments except for the Consumer/IT segment. The decrease in revenue from the Consumer/IT segment was due to a decline in demand from end customers for certain projects, project end-of-life and new projects which have yet to commence the ramp up phase. The decline in the Consumer/IT segment was also due to the advancing of orders in this segment during FY17 which resulted in higher than expected revenue for 1Q17.
Gross profit decreased 17.2% yoy from $25.9 million for 1Q17 to $21.4 million for 1Q18. Correspondingly, the Group's gross profit margin declined from 15.0% for 1Q17 to 12.7% for 1Q18. This was mainly due to the low utilisation levels as a result of lower orders for the Consumer/IT segment.
If the exchange rate of the US Dollar and the Euro remained at the 1Q17 rates, another $4.5 million would have been added to the Group's revenue for 1Q18. Conversely, direct material costs would have been $1.7 million higher. The net impact to gross profit was $2.8 million for 1Q18 while gross profit margin would have declined marginally to 14.0% for 1Q18.
The decrease in marketing and distribution expenses from $3.9 million for 1Q17 to $3.3 million for 1Q18 was due to lower staff costs and related professional fees.
The increase in other expenses was due to the increase in foreign exchange loss from $2.1 million for 1Q17 to $5.2 million for 1Q18. This was the result of the depreciation of the US Dollar against the Chinese Renminbi, Malaysian Ringgit and Singapore Dollar ranging between seven to ten percent over the period.
The increase in finance costs was due to the loan for the Group's Chuzhou factory which was drawn down in June 2017.
The Group achieved a net profit of $1.9 million for 1Q18 compared to $7.7 million for 1Q17. Excluding foreign exchange loss, retrenchment costs and gains from the disposal of plant, property and equipment ("PPE"), net profit would have been $7.1 million for 1Q18 and $9.5 million for 1Q17, representing a 25.5% yoy decline.
CONSOLIDATED BALANCE SHEET
The Group's PPE amounted to $201.4 million as at 31 March 2018, compared to $193.9 million as at 31 December 2017. PPE was stated net of depreciation charges of $7.5 million (1Q17: $7.1 million), partially offset by currency re-alignment and the addition of $13.2 million (1Q17: $9.2 million) in PPE.
The decrease in trade and other receivables was in line with the decrease in revenue. The decrease in trade and other payables was in line with the decrease in revenue and the payments for capital expenditure.
The Group maintained a cash balance of $105.4 million as at 31 March 2018 (31 December 2017: $105.3 million). This resulted in a net debt position of $1.1 million (31 December 2017: net cash $1.6 million) after accounting for loans and borrowings amounting to $106.5 million (31 December 2017: $103.7 million).
CONSOLIDATED CASHFLOW STATEMENT
January – March 2018 ("1Q18")
Net cash from operating activities amounted to $6.9 million for 1Q18, compared to $7.1 million for 1Q17. Net cash used in investing activities amounted to $10.6 million for 1Q18 compared to $7.5 million for 1Q17 due to payments for PPE and higher net proceeds for the disposal of property, plant and equipment in 1Q17.
Net cash generated from financing activities was $3.0 million for 1Q18, compared to $0.4 million, mainly due to additional loans obtained to finance the construction of the Group's new factory in Penang.
The Group continues to face business headwinds in the form of volatile foreign exchange markets and rising labour costs across our operations which span across 20 manufacturing sites in nine different countries.
Despite the challenges, the Group's efforts are focused on boosting productivity and enhancing operational efficiency in order to improve profit margins. Furthermore, the Group continues to sharpen its competitive edge by reinvesting into technology and new machinery to stay ahead of the curve in an ever changing business environment.
Business development initiatives continue to gain traction as the Group has received business queries from both new and existing customers who are confident in the Group's ability to handle challenging projects on a global scale. As such, the Group's order backlog across the Automotive, Healthcare, Consumer/IT and Mould Fabrication segments remains stable. The Group will continue its strategy to further diversify its customer base and product mix in order to ensure the long-term sustainability of its operations.
Construction of the Group's latest manufacturing site in Penang, Malaysia has been completed and is in the midst of doing pilot runs for mass production in the Consumer/IT segment that is scheduled for ramp up in the second half of 2018. This new 15,000 square meter facility is strategically located in close proximity to key customers. The Group will progressively add capacity to this facility with new contract wins from both new and existing customers.
Heading into the remainder of the year, the Group is vigilant of the continued headwinds such as foreign exchange volatility and an increasingly competitive business landscape. However, the Group remains confident in its resilient business model as the long-term sustainability and profitability of operations remain on track.