KUALA LUMPUR: Cape EMS Bhd fell into the red after it posted a net loss of RM18.95 million in the third quarter of financial year 2024 (3QFY24) as customers adopted new materials, standards, processes or behaviours to reduce costs for both industrial and consumer electronic products.
The company made a net profit of RM15.2 million in the same period last year.
In a filing with Bursa Malaysia Securities, the electronics manufacturing services (EMS) provider said the decrease was mainly due to a reduced gross profit margin, impacted by the customers' cost down, particularly on wireless communication equipment and electronic cigarettes.
It added that the losses was further contributed by the unrealised foreign exchange loss of RM12.6 million due to strengthening of the ringgit, amortisation of intangible assets of RM4.4 million as well as the impairment loss on trade receivables of RM2.2 million.
Revenue for the quarter however was up 4.4 per cent to RM141.95 million in the quarter under review from RM135.98 million previously, supported by the contribution from a newly acquired subsidiary, United States (US)-based company iConn Inc.
The contribution mitigated the decrease in revenue from its EMS segment for consumer electronic products, particularly in electronic cigarettes.
On prospects, Cape EMS said with iConn Inc. integrated into its group, it is transitioning to an asset-light manufacturing model, incorporating both online and offline capabilities to increase efficiency, reduce capital expenditures, and enhance its responsiveness to the evolving market landscape.
"Innovation remains a cornerstone of our strategy, with our team actively developing intellectual property to strengthen customer loyalty and generate licensing revenue," it said.
Cape EMS added that it is expanding into green technology solutions, particularly in battery pack manufacturing, to meet the growing demand for sustainability and reinforce our commitment to environmental responsibility.
Despite navigating a challenging global landscape characterised by factors beyond its control including the ongoing US-China trade tensions, global geopolitical conflicts and the uncertain US dollar movement, the company said it remains vigilant in managing the business.
"We are still committed and focused on boosting our efficiency, competitiveness, and ability to quickly adapt to unexpected market shifts," it added.
For the nine month ended Sep 30, 2024, net profit was down almost 92 per cent to RM3.2 million, down from RM38.9 million for the same period in 2023.
Revenue for the nine-month period was up 17.2 per cent to RM462.99 million from RM395.10 million in the same period in FY2023.
This was thanks to contributions from both the industrial and consumer electronic segments, as well as strategic efforts to expand market reach and integrate new capabilities.