SINGAPORE (Nov 3): Serial System, the distributor of electronic components and consumer products, reported a 18% drop in 3Q17 earnings to US$3.1 million ($4.2 million), or 0.35 US cent, from US$3.8 million a year ago despite achieving record quarterly revenue.
The lower bottomline came on the back of lower gross profit margins, reduced earnings from a drop in rebates and commission income from suppliers in the consumer distribution business as well as the as the absence of a US$1.4 million gain in 3Q16 from the partial sale of shares in Korea-listed Unitrontech Co.
Revenue for the three month ended Sept rose 14% to US$395.2 million from a year ago. Revenue from electronic components distribution grew 20% to US$382.1 million, driven largely by higher demand from new and existing customers in Hong Kong, China, South Asia and Taiwan where sales increased between 6% and 36%. South Korea was the only country that reported a 4% drop in sales due to a market slowdown and keen competition.
The consumer products distribution business, which the group has been streamlining in an effort to boost performance, contributed US$12 million revenue in 3Q. This was a 55% decline from a year ago as Serial System scaled back operations in non-performing markets and reduced sales of low-margin products.
Overall gross profit margin slipped to 6.7% in 3Q17 from 7.1% in 3Q16 as a result of keen competition and higher sales of low margin products for electronic components distribution in most markets. This offset a pickup in margins for the consumer products distribution business.
Based on its 27.5% stake in its new joint venture firm, Serial System booked an after-tax profit of US$0.03 million in 3Q17 from Musang Durians Frozen Food (M) Sdn Bhd, which manufactures and sells durian puree and related products.
Dr Derek Goh, CEO and chairman of Serial System, says, “Competition in many of the markets we operate in remains keen, but the overall business outlook is still favourable as global demand for semiconductors and electronics continues to be buoyant.”
Shares in Serial System closed 1 cent lower at 17 cents.