Venture profit up 40% despite drop in revenue

Venture Corp's R&D expenses incurred from prototyping, tooling and other services rose 372.1 per cent to $34.4 million, from $7.3 million in the second quarter of last year. R&D revenue is recognised together with costs.
Venture Corp's R&D expenses incurred from prototyping, tooling and other services rose 372.1 per cent to $34.4 million, from $7.3 million in the second quarter of last year. R&D revenue is recognised together with costs.PHOTO: VENTURE CORPORATION

Firm gets R&D boost; interim dividend of 20 cents a share

Margin expansion from more research and development (R&D) work helped Venture Corp more than make up for a revenue shortfall in the second quarter, lifting the group's net profit in line with street estimates.

The electronics manufacturing services firm posted a net profit of $97.9 million in the second quarter, up 40.2 per cent from the same period a year earlier.

Revenue in the three months ended June 30 was $952.3 million, down 6 per cent.

Net profit margin was 10.3 per cent, up from 6.9 per cent in the second quarter of last year.

R&D expenses incurred from prototyping, tooling and other services rose 372.1 per cent to $34.4 million, from $7.3 million in the second quarter of last year. R&D revenue is recognised together with costs.

Venture yesterday announced a surprise interim dividend of 20 cents a share, payable on Sept 19. There was no interim dividend last year.

The last time Venture rewarded shareholders with a special dividend was in 2007.

  • AT A GLANCE

  • REVENUE: $952.3 million (-6%)

  • NET PROFIT: $97.9 million (+40.2%)

  • DIVIDEND PER SHARE: 20 cents (2017: none)

The company typically pays only a final dividend in May. After a banner year in 2017, some analysts had expected a bumper final dividend earlier this year. Venture ultimately paid a final dividend of 60 cents per share, instead of the usual 50 cents.

In its results filing yesterday, Venture warned of volatility ahead.

"While Venture has delivered a creditable performance in the first half of 2018, some volatility may arise in the near term from customers' mergers and acquisitions, new product and platform transitions, and also from the possibility of escalation of trade war and component shortages," it said.

"Venture and its partners have worked out various strategies to mitigate these issues."

Net cash as of June 30 was $646.9 million. Second-quarter earnings per share came in at 34.1 cents, up from 24.7 cents in the same period last year. Net asset value per share was $7.675 as of June 30, from $7.609 as of Dec 31 last year.

The company's results briefing was closed to media. Chairman and chief executive Wong Ngit Liong "decided to adopt a new approach", it was learnt.

Venture shares closed 0.18 per cent higher at $16.85 yesterday before results were announced after market close.

A version of this article appeared in the print edition of The Straits Times on August 04, 2018, with the headline 'Venture profit up 40% despite drop in revenue'. Print Edition | Subscribe