WBL Corp has suffered a sharp drop in third-quarter earnings, hit by the weaker
performance of its technology business.
Net profit fell to $9 million in the three months ended June 30 from almost
$14 million a year earlier, the group said. Revenue rose about 8 per cent to
$500 million.
'Our key technology manufacturing division had a challenging quarter, and
while it recorded 23 per cent higher sales compared to last year, margins were
eroded and this affected pre-tax profits,' said WBL chief executive Tan Choon
Seng. 'There was also earlier-than-planned end of life for several programmes
and a delay in the introduction of some new products. We were disappointed with
the larger-than-expected losses made in the precision manufacturing operations
in Thailand, but we are confident of recovery as we have addressed the issues
there.'
The group's flexible printed circuit subsidiaries Multi-Fineline Electronix
and MFS Technology were affected by price erosion and product-mix changes.
M-Flex also had start-up costs, lower yields and increased labour costs, due in
part to the new hires to support the expansion of its facilities in Suzhou,
China. The precision operations recorded a loss of $6.6 million, mostly from
Thailand operations, which were hit by cost over-runs.
Revenue and pre-tax profit for the group's automotive division in Q3 were
affected by continued weakness in the Singapore car market, increased
competition and delay in delivery of several new models. Revenue was just over
$80 million while pre-tax profit was $3.7 million, down slightly from $3.9
million last year. The division is continuing with its expansion plans and
expects delivery of several highly anticipated models in the next few quarters.
WBL cautioned that the technology manufacturing and technology solutions
divisions are likely to face continued pressure on margins in the fourth
quarter. The automotive division expects the delivery of several new models
only in the first quarter of FY2007. However, it said the company will continue
to unlock value from its property holdings in the last quarter of FY2006.
