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Broadway Industrial’s FY2021 earnings and revenue reach five-year high; declares dividend of 1.0 cent per share

Felicia Tan
Felicia Tan • 4 min read
Broadway Industrial’s FY2021 earnings and revenue reach five-year high; declares dividend of 1.0 cent per share
The dividend of 1.0 cent comprises a final ordinary dividend of 0.5 cent, as well as a special dividend of 0.5 cent per share.
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Broadway Industrial Group (BIG) has reported earnings of $7.4 million for the 2HFY2021 ended December, 1.2% higher than earnings of $7.3 million in the same period the year before.

The growth for the half-year period marked four consecutive halves of growth as the group’s business turnaround strategy continues to yield results.

Excluding the $2.4 million charge for the impairment of goodwill, BIG’s earnings would have been $9.8 million, up 33.5% y-o-y.

Earnings per share (EPS) for the 2HFY2021 increased 1.3% y-o-y to 1.59 cents.

For the FY2021, BIG’s earnings increased by 8.2% y-o-y to $15.3 million, the highest in five years.

FY2021 revenue climbed 17.7% y-o-y to $471.4 million, marking another five-year high for the group.

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The higher revenue for the year was mainly due to an increase in shipment volume and higher average selling price (ASP) of BIG’s hard disk drive (HDD) products.

Its key HDD customers have also continued to report strong market demand for mass capacity and enterprise drives, driven by their original equipment manufacturer (OEM) customers and cloud data centre companies.

BIG’s gross profit in the FY2021 surged 25.0% y-o-y to $34.7 million, with gross profit margin (GPM) increasing 0.5 percentage points to 7.4%. The higher GPM was due to better manufacturing capacity utilisation from increased shipment volume and continuing cost optimisation efforts for the group’s HDD operations.

See also: Grab posts third straight quarterly profit on cost cuts

During the FY2021, BIG reported net other expenses of $500,000, from the net other income of $700,000 in FY2020. The expenses comprised mainly loss on disposal of property, plant and equipment, allowance for inventory obsolescence, cost associated with product quality, impairment of goodwill and headcount redundancy costs from the productivity gain in the manufacturing operations. This was offset by foreign exchange gain, scrap income and government grants.

As at end-December, cash and cash equivalents stood at $27.7 million.

A final ordinary dividend of 0.5 cent per share, as well as a special dividend of 0.5 cent per share, have been declared for the 2HFY2021, bringing the total dividend for the FY2021 to 1.5 cents per share.

According to BIG, the group will be implementing a dividend policy to distribute approximately 30% of its earnings from the current financial year ending Dec 31, thanks to its strong balance sheet and positive prospects in the HDD business.

Tan Choon Hong, CEO of BIG says, “The positive turnaround of our business over the past two years reflects our successful execution of the operational and productivity improvements and also our efforts to optimise the supply chain. These factors as well as our strategic focus on the enterprise HDD segment had enabled us to leverage current trends for cloud storage and datacentre projects, which are pushing up demand and average selling prices for mass capacity and enterprise drives. As such, we were able to deliver better results.”

Lew Syn Pau, BIG’s non-independent, non-executive chairman adds, “BIG’s performance has grown from strength-to-strength in the past two years following a management restructuring and improvements to optimise the group’s resources as well as a change in segment focus.”

“We believe that the group will continue to ride on this momentum to establish a sustainable future. This gives us the confidence to implement a new dividend policy that will enable our shareholders, who have supported us over the years, to enjoy some returns from their investment in the group,” he continues.

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Looking ahead, BIG says it remains cautiously optimistic about the prospects of its HDD business in the near-term as the demand for mass capacity drives and legacy drives remain strong.

This is expected to be led by the anticipated unit volume and exabyte growth from the enterprise HDD segment over the forecast period, adds the group.

BIG says it is also optimistic on revenue contribution from its robotics business unit “in due course”.

CEO Tan says he believes the prospects for BIG’s robotics business are “good as they offer solutions to many of the concerns we have today”.

“Our façade cleaning robot can clean skyscrapers and reduce the high-risk work that is currently done manually. Our disinfection and delivery robots can be deployed to high-traffic public spaces and is very relevant during the ongoing Covid-19 pandemic to minimise the spread of the virus. Our robots not only enable our customers to lessen their reliance on labour but also to lower staff costs.”

As at 9.09am, shares in BIG are trading 0.5 cents higher or 2.50% up at 20.5 cents.

Photo: Bloomberg

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