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Vicplas reports 15% lower profit after tax of $8.8 mil for FY2022 due to rising supply costs and other Covid disruptions

Felicia Tan
Felicia Tan9/23/2022 08:26 AM GMT+08  • 4 min read
Vicplas reports 15% lower profit after tax of $8.8 mil for FY2022 due to rising supply costs and other Covid disruptions
A final dividend of 0.45 cent per share has been declared. The dividend will be paid out on Jan 20, 2023.
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Vicplas International has reported profit after tax of $8.8 million for the FY2022 ended July 31, 15.0% lower than the profit after tax of $10.4 million in the corresponding period the year before.

Profit after tax for the 2HFY2022 stood 29.4% lower at $3.8 million from the previous year’s $5.4 million.

The lower profit after tax for the full year was due to the rising supply chain costs and other disruptions that stemmed from the Covid-19 pandemic, all of which affected the group’s medical devices segment. During the year, the group’s bottom line was also impacted by higher costs associated with business expansions such as increasing manufacturing facility capacity and bringing onboard additional technical and business development resources.

During the FY2022, revenue rose by 14.8% y-o-y to $130.8 million due to higher revenue from both Vicplas’ medical devices as well as pipes and pipe fittings segments.

Revenue for the medical devices segment increased by 15.5% y-o-y to $92.6 million due to increased orders while the pipes and pipe fittings segments saw revenue increase by 13.1% y-o-y to $38.2 million due to the gradual recovery of the construction industry.

Other income fell by 15.1% y-o-y to $5.9 million mainly due to the absence of Covid-19 related government subsidies.

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Raw materials and consumables used rose 22.1% y-o-y to $63.4 million mainly due to the higher raw materials cost.

Employee benefits expense increased by 17.9% y-o-y to $41.8 million due to higher headcount and increased overtime especially in the medical device segment. This was to meet the higher revenue and investment in medtech talents to meet future demand, says the group.

Other operating expenses rose by 4.5% y-o-y to $14.9 million due to higher electricity tariffs and higher cost of repairs and maintenance to support the increase in revenue.

See also: Banyan Tree announces improved earnings in business update

During the year, the group’s adjusted ebitda fell 1.5% y-o-y to $18.3 million.

Earnings per share (EPS) for the FY2022 stood at 1.70 cents on a fully diluted basis.

As at July 31, cash and cash equivalents stood at $8.89 million.

A final dividend of 0.45 cent per share has been declared. The dividend will be paid out on Jan 20, 2023.

“Vicplas has achieved a respectable set of results for FY2022 given the backdrop of an uncertain and more costly operating environment. Our medical devices segment has maintained its revenue growth momentum but was affected by rising supply chain costs and other disruptions brought on by the Covid-19 pandemic,” says Walter Tarca, group CEO of Vicplas.

“Despite this, it continues to expand its manufacturing footprint and dedicate resources to other technical and business development areas to meet increasing demand from the long-term trend of medical device outsourcing,” he adds.

In his statement, Tarcas announced that Vicplas’ medical devices segment is “actively negotiating” for a suitable site in Juarez, Mexico, to initiate its fifth manufacturing location to provide greater flexibility and choice for its customers.

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In addition, the group’s pipes and pipe fittings segment, which recovered in FY2022, alongside the recovery of Singapore’s construction sector, will “continue to support the local construction industry and will continue to grow its civil engineering projects, as well as product expansion beyond the built environment.”

“We are cautiously optimistic for the next financial year as we need to keep a close watch on the challenges that may arise from the ongoing Covid-19 pandemic, current inflationary pressures, and uncertainties in the wider macro environment,” Tarca says. “Besides continuing to exercise prudent cost management, we will also continue to develop new business opportunities and strengthen our capabilities for future growth.”

The group, in its statement, adds that it expects its revenue to continue growing into the next reporting period with the continued expansion of the medical device segment and the improved outlook for the pipes and pipe fittings segment as the construction sector in Singapore improves.

Shares in Vicplas closed at 19 cents on Sept 22.

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