Venture Corporation Ltd’s Latest Earnings: Steady Eddy Growth Seen

Venture Corporation Ltd  (SGX: V03) released its second-quarter earnings report for its fiscal year ending 31 December 2015 yesterday evening. The reporting period was for 1 April 2015 to 30 June 2015.

The electronics services manufacturer serves a variety of industries, such as printing & imaging, networking & communications, retail store solutions & industrial, computer peripherals & data storage, and test & measurement / medical & life science / others. The firm does business primarily in the Asia Pacific region.

You can read more about Venture in here and here.

Financial highlights

The following’s a quick take on Venture’s latest financial figures:

  1. Revenue for the quarter was up a nice 10% to $661 million compared to a year ago.
  2. Consequently, net profit for the period rose by 7.5% year-on-year to $36.1 million.
  3. As a result, earnings per share (EPS) also rose 7.4% from 12.2 cents in the second-quarter of 2014 to 13.2 cents in the reporting quarter.
  4. With $29.1 million in cash flow from operations and just $5.6 million in capital expenditures, Venture thus ended the reporting quarter with $23.5 million in free cash flow. It’s always nice to see free cash flow, but this also represents a step back from the free cash flow of $36.4 million ($41.6 million in cash flow from operations and $5.2 million in capital expenditures) that was generated in the second-quarter of 2014.
  5. As of 30 June 2015, the company had $329.8 million in cash and equivalents and $174.8 million in borrowings.

In all, Venture had registered nice growth in both its top- and bottom-line for the reporting quarter.

The electronics services provider also generated positive free cash flow and had maintained a strong balance sheet. The decline in Venture’s cash flow from operations for the reporting quarter as compared to a year ago was the result of an increase in inventory to support customer requirements and programmes.

Operational highlights

Venture’s top-line in the reporting quarter had benefited from higher shipments and favourable exchange rate movements.  On the profit-front, higher income taxes in the quarter had led to Venture’s net profit growing at a slightly slower pace than its revenue.

For a future outlook, here’s what Venture’s management has to say in the earnings release:

“The economic landscape, in which our customers operate, remains challenging with elements of uncertainty. This is reflected in the generally cautious outlook of our customers. The Group remains focused on sustaining operational excellence and driving innovation; and continues to strengthen its strategic capabilities and competencies in several domain areas and market verticals.

With strong sustaining operational excellence and broadening of innovation thrusts throughout the organisation, the Group can expect to capture more market share with its existing customers and to win new programmes and customers.”

Foolish summary

At its closing price yesterday of $8.03, Venture Corporation traded at around 15 times its trailing earnings and offers a dividend yield of 6.2% based on its annual dividend of S$0.50 per share in 2014.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.