PRECISION plastic components manufacturer Fu Yu Corp is projecting a brighter outlook for FY2024 with the launch of new transformation strategies to &ldquo build a much stronger business foundation, open up new business opportunities and enhance shareholder value&rdquo .

 

The group on Tuesday (Nov 28) said it expected China&rsquo s economic slowdown, rising interest rates and geopolitical tensions to &ldquo pose challenges&rdquo for FY2023.

 

For the nine months ended Sep 30, Fu Yu reported a 34 per cent decline in revenue to S$104 million from S$157.6 million the year prior. Gross profit fell 67.8 per cent on the year to S$9.5 million from S$29.5 million previously, led by lower profit contributions from the manufacturing business.

 

Fu Yu group chief executive David Seow said its customers typically give one, three and six-month forecasts for future orders. Over the last year, customers have revised their forecasts downwards as they continued to hold large stockpiles of inventory post-pandemic.

 

&ldquo We saw that trend happen for the last year but it seems to have improved so we are hopeful that come next year, things will be better,&rdquo he said.

 

Its audited results for the full year are expected to be released in late February 2024.

 

Going forward, Fu Yu anticipates its FY2024 financial performance to improve on expectations of a higher topline driven by the launch of its newly established &ldquo Smart Factory&rdquo facility along Tuas Drive. This involved additional capital expenditure of S$22 million.

 

Seow said that capital expenditure improvements will start to bear fruit next year as the company has upgraded its machinery and hired more engineers to manufacture products within the two to five micron precision range. This is an improvement over the 10 to 20 micron range that the company could manage previously.

 

The upgrade will allow the company to manufacture smaller components, such as the plastic lenses that go over the sensors of electric cars and other biomedical products.

 

Seow is particularly bullish on the biomedical sector, which will involve the manufacturing of products such as syringes and endoscopes.

 

Although the sector currently accounts for less than 10 per cent of the company&rsquo s revenue, he expects it to contribute to at least half of its revenue in three years&rsquo time.

 

Because the biomedical sector has stringent requirements and very high entry barriers, he believes that the company will be able to find a niche for itself in the space.

 

Higher margins in the biomedical segment, advances in smart manufacturing, and group-wide efficiencies are also believed to improve FY2024 gross profit margin compared to the 9 per cent margin achieved in H1 of FY2023.

 

Fu Yu also projects revenue contribution from its export tooling segment &ndash where revenue contributions will commence from FY2024 &ndash to &ldquo rise significantly&rdquo .

 

Fu Yu&rsquo s announcement follows the completion of its strategic review headed by Seow.

 

Seow was appointed after the board was reconstituted in 2021, following Pilgrim Partners Asia&rsquo s acquisition of a 29.8 per cent stake in the company.

 

In its Nov 28 filing, Fu Yu said that its board had outlined five major strategies to &ldquo address the fresh challenges and opportunities&rdquo post-Covid with its recent completion of the company&rsquo s strategic review.

 

The first is to place a back-to-back emphasis on the design and manufacturing of mould capabilities, as well as improvements to group-wide efficiencies related to its Smart Factory as a hub to support plastics manufacturing.

 

Secondly, the company intends to target higher-precision tooling and components for the bio-medical and life science industries while enlarging its geographic and sectoral market reach.

 

The third strategy is to position the company to help customers improve their sustainability efforts and reduce greenhouse gas emissions.

 

This will be accomplished through initiatives such as the use of renewable energy, alternative raw materials, additive manufacturing technologies, and data capture of carbon reduction throughout the manufacturing process.

 

Fu Yu&rsquo s fourth strategy is to optimise its manufacturing processes, shorten lead times, and improve cost efficiencies by engaging with its customers early at the design phase, and integrating product development.

 

Lastly, the group said it aimed to increase shareholder value by forging alliances and collaboration globally to raise Fu Yu&rsquo s profile as it explores merger and acquisition opportunities.

 

Seow said: &ldquo We strive to be that one-stop shop &ndash so rather than have the customer go and look for his five suppliers himself, we will find partners to work with in the metals, rubber, electronics industries and then we try to do everything for our customer.&rdquo

 

He added that the company&rsquo s strong balance sheet allows it to pursue these different opportunities despite the current interest rate environment. The company was in a net cash position of S$56.7 million as at Sep 30, 2023.

 

Fu Yu Corporation F13 -1.28% has reported a net loss of $3.9 million for the 1HFY2023 ended June 30, down from its earnings of $10.9 million for the 1HFY2022.

 

The net loss was attributed to slower demand and higher operating costs from labour and energy as well as expenses from its business developments.

 

Revenue for the six-month period fell by 41.5% y-o-y to $71.2 million due to sluggish business activities for the company&rsquo s manufacturing and supply chain management segments amid weak economic growth, prolonged geopolitical tensions and a higher interest rate environment.

 

Revenue for Fu Yu&rsquo s manufacturing business fell by 26.9% y-o-y to $52.6 million amid China&rsquo s slower-than-expected economic recovery. Sales in Singapore and Malaysia also eased.

 

In the 1HFY2023, gross profit fell by 69.6% y-o-y to $6.4 million while gross profit margin stood at 9.0%, nearly half of the 17.3% in the 1HFY2022.

 

Loss per share stood at 0.51 cents on a fully diluted basis.

 

Cash and cash equivalents as at June 30 stood at $60.5 million.

 

The group says it remains &ldquo cautiously optimistic&rdquo that its order flow will remain &ldquo healthy&rdquo looking ahead. It has also initiated several strategies for business transformation and long-term growth including diversifying its customer base and moving up the value chain to provide higher-precision products.

 

&ldquo Despite macroeconomic headwinds, we continue to see new business opportunities, and have been investing to enhance our capabilities and capture markets which offer higher margins. Hence, our financial performance for 1HFY2023 has to be seen under the lens of our ongoing transformation,&rdquo says David Seow, Fu Yu&rsquo s group CEO.

 

&ldquo Looking ahead, we are focused on growing our customer base while maintaining a lean cost structure, in anticipation of a challenging operating environment. The group is finalising its Smart Factory, which we expect to fully launch by the first quarter of 2024. Featuring Industry 4.0 capabilities and improved automation, the facility will enable Fu Yu to grow our lead as one of Asia&rsquo s largest high-precision plastic parts manufacturer, in turn adding value to shareholders as well as our business partners,&rdquo he adds.

Precision plastics manufacturer Fu Yu Corp has reported a revenue of $35.8 million in its 3QFY2022 ended Sept 30, down from $36.7 million the same period before.

 

Operating profit dipped slightly from $4 million to $3.9 million, but the company saw a higher net profit figure of $4.7 million, a 42.5% jump compared to the $3.3 million a year before.

 

This was mainly due to a higher net foreign exchange gain of $1.6 million in 3QFY2022 compared to a gain of S$0.5 million in 3QFY2021, as Fu Yu revealed that it is in a net US Dollar assets position, and the appreciation of the US Dollar against the Singapore Dollar, Malaysia Ringgit and Renminbi in resulted in a higher net foreign exchange gain

 

Fu Yu said in a release that the global business landscape in 3QFY2022 continued to be weighed down by rising inflationary cost pressures, disruptions in the supply chain and raw material production as well as heightened geopolitical tensions.

 

In addition, the restriction measures in China triggered by the pandemic continued to pose operating challenges for businesses and affect the country&rsquo s economy.

 

For 9MFY2022, the company reported revenue of $157.6 million, an increase of 47.1% from $107.1 million in 9MFY2021.

 

Net profit surged 28.5% to $15.6 million, compared to the $12.1 million in the same period a year ago.

 

This was attributable mainly to the addition of a new revenue stream from its supply chain management services business, Fu Yu Supply Chain Solutions (FYSCS) which was acquired in July 2021.

 

The supply chain management services business contributed revenue of $50.2 million to Fu Yu, while its manufacturing business generated stable revenue of $107.4 million in 9MFY2022 compared to $107.1 million in 9MFY2021.

 

Geographically, higher sales of its Singapore manufacturing operations counterbalanced slight decreases in the sales of its Malaysia and China segments in 9MFY2022.

 

The Singapore segment recorded revenue of $40.7 million, up 6.8% y-o-y due mainly to higher sales of medical products.

 

Meanwhile, revenue from Malaysia fell 1.4% to $25.6 million in 9MFY2022 from $26 million a year ago, and revenue from China eased by 4.4% to $41 million in 9MFY2022 from $43 million in 9MFY2021.

 

Fu Yu' s statement to SGX didn' t say what led it to enter the settlement agreement with its CFO on her cessation. 

FU YU Corp : F13 -2.08% and its chief financial officer have mutually agreed to part ways &ldquo by settlement agreement&rdquo , announced the mainboard-listed maker of high precision plastic parts and moulds on Friday (Oct 7).

 

In a statement it furnished to the Singapore Exchange (SGX), Fu Yu did not explain what led to it entering the settlement with the 51-year-old Hee Siew Fong, who was appointed to the position in 2016.

 

The firm, however, said Hee and the board did not have any disagreements on matters that may have a material impact on the group and its financial reporting, nor are there concerns with regard to financial reporting that led to her leaving in December.

==

Japan Foods clarifies MOM has not given details of potential employment breach

 

JAPAN Foods : 5OI 0% clarified that its unit Japan Foods Enterprises (JFE) and not the whole group is temporarily prohibited by the authorities from applying or renewing employees&rsquo work passes and that it was not told details of any potential breach.

 

The food & beverage player stated in its response on Friday (Oct 7) to the Singapore Exchange (SGX) that it has not been given any details by the Ministry of Manpower (MOM) and it did not want to speculate about the &ldquo past hiring and payroll practices&rdquo that might have flouted the Employment of Foreign Manpower Act.

 

Also, the Catalist-listed player noted JFE is not restricted from hiring local full-timers, part-timers and contract staff if they do not require the application or renewal of work passes.

 

Japan Foods furnished a statement to the SGX on Tuesday on JFE facing the suspension while MOM investigates.

 

And to deal with MOM&rsquo s restriction, JFE will work on &ldquo right-balancing&rdquo its workforce but the group&rsquo s existing operating outlets might not have to be shut temporarily.

 

Prominent brands under Japan Foods include Afuri, Ajisen Ramen and Fruit Paradise