Globetronics's 1Q net profit plunges 78.5% on lower demand

by **Cals** Wed 27 Apr 2016, 06:36

Globetronics's 1Q net profit plunges 78.5% on lower demand

By Supriya Surendran / theedgemarkets.com | April 26, 2016 : 3:14 PM MYT

KUALA LUMPUR (April 26): Globetronics Technology Bhd saw its net profit for the first quarter ended March 31, 2016 (1QFY16) plunge 78.5% to RM3.68 million or 1.31 sen a share from RM17.15 million or 6.1 sen a share a year ago.

The semiconductor player attributed the drop to lower volume loadings from some of its customers as a result of lower demand from end customers, as well as a forex loss of RM4.6 million.

Lower customer demand had also caused revenue to drop 33.8% to RM58.74 million in 1QFY16 from RM88.7 million in 1QFY15, the group said in a filing to Bursa Malaysia today.

Globetronics, whose key products include sensors, quartz timing devices, light emitting diodes and integrated circuits, said it expects the lower volume loadings from some customers to continue in 2QFY16, as well as a general slowdown in the industry.

"The group will continue to focus on escalating up the value chain and riding on the research and development initiatives in new products design and development with our key customer.

"This initiative is expected to result in the manufacturing of new products in the second half of the financial year," it said.

Yesterday, Globetronics received an unusual market activity query from Bursa Malaysia following a 17.3% drop in its share price to RM4.44 from RM5.37 on April 21.

In its reply today, Globetronics said it is not aware of what could have triggered the drop in its share price, save for several articles that may relate the company as the contract manufacturer of sensor components to a leading global smartphones/tablets manufacturer.

Globetronics also cited other articles which highlighted the softening outlook and weakening demand for the products of the smartphones/tablets manufacturer and the recent article published in Taiwanese newspapers regarding smartphones/tablets manufacturer requesting its component suppliers in Taiwan to "cost down" around 20% to 30%.

At the midday break today, Globetronics shares fell 31 sen or 7% to RM4.13 on a volume of 17.94 million shares, giving a market capitalisation of RM1.17 billion. The counter was among the top three losers.