Acoustech benefits from weaker ringgit

PORT KLANG: Audio equipment manufacturer Acoustech Bhd said the weakening of ringgit against the greenback has brought a windfall for the company, as it gains on export activities.
Acoustech’s core business is in the manufacturing of speaker units on an original equipment manufacturing basis for major consumer electronic brand names, including Sony, Panasonic, JVC and Kenwood.
Speaking to SunBiz after the company’s EGM yesterday, Director Leong Ngai Seng said that almost all of its products are directly and indirectly exported to the US and European countries with business transactions done in US dollars.
“The depreciation of the ringgit by and large for exporters is always a good thing, because we sell in US dollars,” he added, saying that the company’s manufacturing business contributes 80-90% of its revenue.
However, despite this advantage, Leong said the company is experiencing pressure from its clients to reduce its sale price, as the company is benefiting from the US dollar appreciation.
“It is always a give and take. We are currently in negotiations and if we can actually absorb it (the sale price), we will consider it,” he said.
Commenting on the company’s financial performance, Leong expects its financial year ending Dec 31, 2015 to be better than the previous year, driven mainly by its manufacturing business.
He said next year will be more challenging though, given the uncertain long-term demand and fluctuating currency.
Leong said in line with this the company is looking at cost reduction measures to control its operating expenditure.
“We are cutting costs left, right and center. For a start, we have disposed our (manufacturing) plant in Sungai Petani. We felt that managing a plant in the north is draining our resources and management time. So we decided to streamline that particular operation and centralise our operations in Port Klang,” Leong said.
Earlier at the EGM, Acoustech’s shareholders approved the proposed acquisition of a 100% stake in Johor-based property developer JM Cemerlang Sdn Bhd for RM15.5 million and proposed a diversification of its existing business into property development.
“With this acquisition, continuously year after year we hope that the property division will contribute something towards the overall turnover of the company,” Leong said, adding that he expects contribution to begin next year.
For the second quarter ended June 30, 2015, its net profit grew to RM3.28 million, compared with RM193,000 in the previous corresponding quarter. However, revenue for the quarter shrank 60% to RM18.13 million, from RM46 million a year ago.
For the first six months, its net profit was up 47% to RM1.97 million, from RM1.34 million last year, while revenue was down 44% to RM45.95 million, against RM81.62 million previously.