Corporate News
Willas-Array Electronics Reports Lower Earnings But On-Going Rationalisation Strengthens Growth Prospects
Singapore - 28 November 2001 - Willas-Array Electronics (Holdings) Limited (Willas-Array), one of the leading Hong Kong-based distributors of electronic components in the Asia Pacific region, today reported net profit of HK$10.7 million (S$2.5 million) on turnover of HK$500.9 million (S$115.2 million) for the first six months ended 30 September 2001.
This is compared against net profit of HK$33.9 million (S$7.8 million) and turnover of HK$672.4 million (S$154.6 million) in the first half of last year.
This decline was in line with the Group's announcement in October that its interim performance had been affected by the slowdown in the global demand for electronics. Though sales were down by only 26%, margins were eroded due to the oversupply of certain components in some product segments.
Based on the existing issued share capital, earnings per share fell from 15.95 Hong Kong cents to 4.47 Hong Kong cents. However net tangible assets per share rose from 69.36 Hong Kong cents to 78.45 Hong Kong cents. The Directors have proposed no interim dividend.
Executive Chairman, Mr Lawrence Leung said, "Our performance was creditable in view of the expected 31% fall in the semiconductor industry1 this year. In difficult times, customers look for partners like us who can add value. We have strong Application and Development capabilities to help our customers create the most efficient solutions and we also provide in-house engineering support. These value-added services are particularly well-received by our customers as they reduce their development time."
The Group offers a wide array of value-added services including "kit" solutions, where its engineers consolidate all suitable components from different principals for specific applications, to enable customers to reduce their inventory levels, lower supplier and procurement costs, reduce cycle time, and simplify material planning activities.
To stay ahead, in addition to providing value-added services, the Group has also implemented systems and measures to streamline operations and rationalise costs.
As China continues to be the market with the greatest growth potential for electronic components, penetrating the market will remain the Group's main focus for growth.
According to a published report2, PC sales in China is expected to see growth of less than 20% in the first and second quarters of 2002. This is compared against a shrinkage of 1.6% in global PC shipments in 2001 and a contraction of 13% in the US market.
"We are fortunate to have a strong and established foothold in China PRC as we have been there for eight years. With its growing electronics industry, we believe that China will provide the impetus for WAE's future growth," added Mr Leung.
In line with its strategy to extend its sales and distribution network in China, the Group recently opened a new representative office in Qingdao to cover the territorial areas of Qingdao and the north-eastern part of China. Another office will soon be opened in Xiamen.
The Qingdao office, which will be the Group's fifth in China, will serve existing customers such as the Haier Group and potential customers such as Qingdao Ai Nuo Intelligent Instrument Co Ltd and the Hisense Group. The Xiamen office, on the other hand, will serve the Fujian area. Customers will include Xiamen Topstar Lighting Co Ltd, Xiamen Solid Electronics Co Ltd, and Fujian Start Computer Group.
However, the outlook for the second half 2001 remains uncertain given the volatility in the end markets for our customers which has consequently affected demand for electronic components in general. Coupled with the uncertainties arising from the September 11 tragedy in the US, overall visibility ahead for electronic industry is extremely poor. Nevertheless, the Group is cautiously optimistic and still expects to be profitable for the full year, although the amount would be significantly lower than last year.
"Although the business challenges we face are great, so are the opportunities. We will spare no efforts in looking for new businesses that will complement and further strengthen the company while keeping operations lean and mean. This will strongly position us to ride on the growth in China and the global recovery when it happens," concluded Mr Leung.
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1 The Straits Times, The Business Times, November 9, 2001
2 Dow Jones Newswires, "Asian Stock Focus: China PC Makers Shielded from Slump", November 20, 2001
Established since the early 1980s, Hong Kong-based Willas-Array is principally engaged in the distribution of active and passive electronic components for use in the audio/video, telecommunications, industrial, consumer and computer segments. Backed by long-standing relationships with over 20 reputable Principals, Willas-Array carries a wide product mix distributing and marketing in excess of 10,000 product items which cater to over 2,000 active customers. Its main markets are in Hong Kong and the PRC.
In the PRC, Willas-Array has established a network of representative offices strategically located in Beijing, Guangzhou, Shanghai, Shenzhen and Qingdao, as well as an Application and Development Division in Guangzhou.
