KUALA LUMPUR (Feb 27): ATA IMS Bhd's net loss swelled to RM147.41 million in the third quarter ended Dec 31, 2022 (3QFY2023) from RM3.06 million in the immediate preceding quarter. Loss per share widened to 12.25 sen from 0.25 sen in 2QFY2023.

This is the group's fourth straight quarterly loss as the termination of  its manufacturing contracts by Dyson continued to weigh on earnings.

Year-on-year, the latest loss compares with a net profit of RM5.53 million or earnings per share of 0.46 sen in 3QFY2022, the Johor-based electronic manufacturing services group’s bourse filing showed.

"The decrease in revenue and profit before tax was mainly attributable to the termination of contracts by the major customer with ATA Industrial (M) Sdn Bhd, coupled with impairment of assets and goodwill following the receipt of notice of termination of contracts by the major customer with Jabco Filter System Sdn Bhd and Winsheng Plastic Industry Sdn Bhd as announced by the company on Dec 23, 2022," the group said.

The quarterly earnings were also dragged down by higher operating expenses, which ballooned to RM118.61 million after it recognised an impairment of goodwill of RM76.4 million and impairment of property, plant and equipment of RM41 million. In contrast, it booked an operating income of RM410,000 in 3QFY2022.

ATA IMS's quarterly revenue plummeted 72.06% year-on-year to RM191.04 million from RM683.81 million a year ago.

For the first nine months of FY2023, the group posted a net loss of RM165.72 million compared to a net profit of RM17.74 million in the previous corresponding period, as revenue fell 63.21% to RM798.83 million from RM2.17 billion.

ATA IMS had in December last year confirmed receiving termination notices for various contracts from Dyson Manufacturing Sdn Bhd and Dyson Operations Pte Ltd.  

“The collective sale of the customer’s products by the group represents approximately 80% of the group’s revenue for the nine months ended Dec 31, 2022. The financial impact is therefore material in all aspects arising from the termination of the contracts,” the group said.

As a result, the group expects its turnover for FY2023 to come down by approximately 60% from FY2022.

In response to the termination of Dyson's contracts, the group is undertaking further downsizing and cost cutting measures, which includes reducing production capacity by selling excess assets, discontinuing additional rented factories and reducing work force.

Meanwhile, it is actively engaging in business development to secure new customers and new business opportunities in response to the termination of contracts to ensure sustainability.

ATA IMS' share price closed up 1.5 sen or 4.29% at 36.5 sen on Monday (Feb 27), bringing the group a market capitalisation of RM440 million.