SINGAPORE (April 28): Serial System has announced earnings of US$2.7 million ($3.8 million) for the first quarter ended March 31, reversing from its loss of US$6.6 million in the same period a year ago as losses from associate companies shrank while allowances for obsolete inventory fell.

This brings the electronic components distributor’s fully diluted earnings per share (EPS) to 30 US cents for 1Q, as compared to a loss per share of 73 US cent in the previous year.

The group saw a significant improvement to its bottom line despite no significant increase in sales, which amounted to US$332.9 million, almost similar to the US$332.8 million reported in 1Q16.

While revenue from the electronic components distribution business grew 20% to US$315 million on the back of higher contributions from Hong Kong, China and South Asia Pacific, this was offset in part by lower sales in South Korea and Taiwan.

At the same time, revenue from the consumer products distribution business saw a 75% decline to US$17.1 million due to lower sales across the board.

Turnaround in profitability was also partially attributable to higher profit margins from Serial System’s consumer products subsidiaries, in addition to more favourable foreign‐exchange rates, which enabled the group to reduce currency translation losses, such that gross profit  margin rose to 7.2% from 6.7% in 1Q16.

Overall distribution expenses fell 9% to US$11.5 million – a result of declines in staff costs, advertising and promotion expenses, licence fees, maintenance and service costs and sales commission expenses.

Notably, Serial System’s share of losses in associated companies amounted to just US$0.3 million in the quarter, which was substantially less than the US$3.2 million of losses reported in 1Q16.

Bull Will and SPL Holdings (Australia), in which Serial System has stakes of 29.03% and 27.34% respectively, were behind the share of losses registered in 1Q17.

According to Serial System’s executive chairman and CEO, Derek Goh, the group’s close ties with leading chip suppliers and electronics manufacturers should bode well for business for the rest of the year in spite of the highly-cyclical nature of the semiconductor industry.

“As mentioned in our recently‐released annual report for 2016, we will house our key consumer products distribution subsidiaries – Swift‐Value, Achieva Technology Pte Ltd and Serial I‐Tech (Far East) Pte Ltd – under a single group from this year. Together, they can leverage each other’s strengths, business networks and reach to achieve better results,” says Goh.

As at 4:34pm, shares of Serial System are trading 0.6% higher at 18 cents.

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