Vicplas International announced its FY2023 results, with revenue decreasing slightly by 1.2% to S$129.2 million from S$130.8 million in FY2022 due to lower revenue from its medical devices segment, and profit after tax dropping by 52.1% to S$4.2 million.
Commenting on the FY2023 results, Mr Walter Tarca, Group Chief Executive Officer of Vicplas said: “In
FY2023, the performance of our medical devices segment was affected by certain customers rightsizing
their inventory levels post pandemic, higher operating costs due to rising supply chain and other input
costs as well as costs from the first full 12 months of operations of our new Changzhou plant extension.
We also invested in additional technical resources to meet customer demand and reprioritised sales and
new business development activities as markets reopened post pandemic. I see this current period of time as a challenging one after the last 4 years of rapid growth but we continue to commercialise new projects while investing in new capabilities and the development of a nearshore USA plant in Mexico in order to improve our collaboration and offerings to our global customer base. While the medical devices segment faces these headwinds, our Group’s performance has been supported by the continued growth in our pipes and pipe fittings segment with the recovery of Singapore’s construction sector, especially as new residential and mega projects come online. The pipes and pipe fittings segment will continue its focus on civil engineering projects and product expansion beyond the built environment, while containing costs and improving efficiency. As a Group, we will be prudent and resourceful in operating in an uncertain macro environment with ongoing inflationary and interest rate pressures and remain very focused on managing our cost base while developing our capabilities and creating new business opportunities for future growth.”
Financial Highlights
Revenue for the medical devices segment was S$90.6 million in FY2023, a decrease of 2.2% from in FY2022 due to reduced orders from certain customers as they rebalanced their post pandemic inventory levels in response to the gradual recovery of the global logistics situation.
The pipes and pipe fittings segment on the other hand, recorded an increase of 1.2% in revenue to S$38.7
million in FY2023 from S$38.2 million in FY2022 as construction activities in Singapore improved.
Other income decreased 24.7% to S$4.4 million in FY2023 mainly due to the decrease in income from
tooling, mould and maintenance services as compared to FY2022. Raw materials and consumables used
decreased by 1.2% to S$62.7 million due to the decrease in production activities, while employee benefits
expense (including salary) decreased by 3.0% to S$40.6 million due to decreased headcount and overtime, especially in the medical devices segment.
In FY2023, other operating expenses increased by 16.5% to S$17.3 million mainly due to costs associated
with operations at the new Changzhou plant extension, costs related to the establishment of the planned new plant in Mexico as well as higher marketing and travelling costs from Vicplas taking steps to source for new business opportunities as markets reopened post pandemic. Vicplas also incurred foreign exchange loss of S$1.6 million (majority unrealised) in FY2023, which was significantly higher as compared to the loss of S$0.1 million in FY2022.
Vicplas’ finance costs increased by 35.0% to S$1.2 million in FY2023 mainly due to the higher interest
rate environment. Income tax expense however, decreased by 36.7% in FY2023 due to lower profitability.
Overall, the Group recorded profit before tax of S$5.6 million for FY2023, which was a decrease of 49.0%
from S$11.0 million in FY2022, and profit after tax of S$4.2 million, which was a decrease of 52.1% from S$8.8 million in FY2022. Vicplas’ adjusted EBITDA for FY2023 was S$14.7 million, a decrease of 19.9% from FY2022.
Financial Position
As of 31 July 2023, the Group has a net asset value per share (excluding treasury shares) of 15.37 Singapore cents (31 July 2022: 15.32 Singapore cents), shareholders’ equity of S$78.6 million (31 July 2022: S$78.3 million) and cash and cash equivalents of S$8.6 million (31 July 2022: S$8.9 million).
Final Dividend
Vicplas is recommending a final dividend of S$0.0045 per ordinary share (one tier tax exempt) for FY2023 for approval by shareholders at the Annual General Meeting to be held on 28 November 2023. This recommendation of maintaining the same dividend rate as FY2022 is made after considering
the uncertain macro environment, inflationary pressures as well as the Group’s working capital,
cashflow and capital expenditure requirements.
Business Outlook
Vicplas expects revenue growth to be constrained in the next reporting period for its medical devices segment, whilst the pipes and pipe fittings segment is expected to continue its gradual recovery. Vicplas also faces increasing operating costs due to inflationary pressures and higher development and expansion costs.
While being cautiously optimistic, Vicplas is wary on the challenges that may arise from the uncertainties in the wider macro environment and the ongoing inflationary and interest rate pressures. The Group will continue to exercise prudent cost management, while developing new business opportunities, and strengthening its base for future growth.
Medical devices segment
The current expectation for the medical devices segment is for its revenue and segmental result to be
constrained during the period when the rightsizing of inventory in supply chains by its customers is still in progress and the new Mexico plant is being set up and operationalised. After this phase is completed, the segment will be well-positioned to further grow its global customer base in key medical devices markets such as USA, Europe and Japan as well as expand its capability to service new projects for the China market.
Pipes and pipe fittings segment
With a manufacturing presence in Singapore and a wide range of quality products certified with 4 Green Marks from the Singapore Green Building Council, the segment is well positioned to support its customers as the domestic construction industry continues its growth momentum.
The segment will continue to focus on civil engineering projects as well as product expansion beyond the built environment. Whilst the segment expects higher revenue from the brightened industry outlook, it continues to face intensified competition, cost pressures and credit risk exposures.
Vicplas’ share price as of 28 September 2023 after market close was S$0.137.
