The Good And The Bad: What Investors Should Know About Venture Corporation Ltd’s Latest Earnings

Venture Corporation Ltd (SGX: V03) is an electronics manufacturing services provider. It has its fingers in a range of activities, such as printing & imaging; networking & communications; retail store solutions, and more.

In late April, Venture released its 2017 first quarter earnings. There are both positive and negative takeaways from the company’s latest earnings that investors may want to learn about. Let’s take a look, starting with an overview of the numbers:

1. The overall result

Here’s a table showing some of the important numbers from Venture’s income statement for the first quarters of 2017 and 2016:

Source: Venutre 2017 first quarter earnings release

It’s clear that the first quarter of 2017 was a good one for the company, given the strong revenue and earnings growth of over 30% each.

2. The positives

Firstly, there was strong top-line growth at Venture, as I already mentioned. Top-line growth is important for a company as it is a gauge of the market’s demand for its products and/or services. Venture’s revenue benefitted from new products and programme introductions by its customers.

Secondly, Venture’s pre-tax profit margin expanded from 6.7% in the first quarter of 2016 to 7.1%. Not only did the company grow its revenue, it also improved its operational efficiency during the quarter.

3. The negative

Operating cash flow was negative for Venture during the reporting quarter, driven mainly by an increase in inventory and receivables. The negative operating cash flow stands in huge contrast to the same period last year, when the company generated S$95.6 million in operating cash flow.

The cash flow situation should be manageable for now, given that Venture has a strong balance sheet with a net-cash position (total cash minus total debt) of S$400 million. But, it’s still something for investors to keep an eye on in the quarters ahead.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.