SINGAPORE (Aug 14): Valuetronics Holdings reported earnings fell 3.1% to HK$48.1 million ($8.5 million) in 1Q20 from HK$49.7 million in 1Q19.

This came on the back of a 7.1% decline in revenue to HK$654.3 million from HK$704.0 million a year ago, due to the weaken consumer and business confidence under the uncertain macro-environment.

Revenue from the group’s Industrial and Commercial Electronics segment was 5.3% lower at HK$413.5 million, while revenue from the Consumer Electronics segment fell 9.9% to HK$240.8 million. The drop in revenue from both segments were due to decrease in demand from some of the group’s customers.

With cost of sales decreasing by 7.6% y-o-y to HK$555.3 million, 1Q20 gross profit came in at HK$99 million, 3.7% lower than HK$102.8 million last year.

Selling and distribution expenses fell 19.9% y-o-y to HK$8.7 million, but administrative expenses increased 6.5% to HK$43.5 million.

Other income and gains grew 43.1% to HK$7.8 million from a year ago, mainly due to the increase in interest income.

As at end June, cash and cash equivalents stood at HK$993 million. 

Ricky Tse Chong Hing, chairman and managing director of Valuetronics, says, “Our leased facility in Vietnam has been qualified by our customer and shipments to US have already started. This alternative option in Vietnam that we have provided is part of our value-added service to customers that are looking at diversifying their manufacturing footprint outside of China. We intend to acquire a plot of land to build our own manufacturing facility in Vietnam so as to cater to future customer needs.”

Barring unforeseen circumstances, the group says it expects to remain profitable for FY20.

As at 11.50am, shares in Valuetronics are trading 1.65% higher at 62 cents.