KCE Reports a Profit Growth by 20% in 2020 after Recording Lower Expenses-Higher FX Gains

KCE Electronics Public Company Limited (KCE) has reported its yearly consolidated financial statement of 2020 through the Stock Exchange of Thailand as follows;

In 2020, KCE reported a net profit of 1,126 million baht, increased 20.58% compared to a net profit of 934 million baht in 2019.

Sales revenue in Thai baht terms declined slightly from 12,097.4 million baht in 2019 to 11,527.2 million baht in 2020, representing a reduction of 4.7% YoY, while sales revenue in USD terms declined by 5.3% YoY to USD 372.1 million.

The YoY decrease in revenue was due mainly to a 12% decrease in sales volume, as customer orders dropped sharply in 2Q20 following a major economic crisis that faced the automotive industry due to COVID-19 and lockdown measures.

However, sales orders improved at the end of the third quarter and continued to ramp up in the fourth quarter of 2020 after a recovery occurred in the automotive market. In 2020, despite a decline in sales volume, special grade PCB (HDI) sales grew considerably by 44% YoY, and customer orders reached a record high in December 2020.

Changes in foreign currency exchange rates had an impact on revenue recognition in Thai baht terms, which resulted in a gain of 82.4 million baht YoY

 

In 2020, the cost of sales decreased slightly to 78.2% from 79.7% in 2019, which resulted in the gross profit margin increasing to 21.8% from 20.3% the previous year. The cost of goods produced during the second half of 2020 declined gradually following an increase in orders and production capacity utilization, particularly in the fourth quarter.

As a result, the gross profit margin increased to 24.2% of sales in 4Q20 that enabled the average gross profit margin widened slightly YoY despite the Thai baht’s appreciation and a higher price of copper used.

 

Selling, general, and administrative expenses amounted to 1,449.2 million baht in 2020, or 12.5% of sales, a decrease from 1,612.8 million baht the previous year. Selling expenses, such as freight costs and sales commissions, decreased in line with lower sales.

The decrease in administrative expense was mainly due to cost control measures in place, a reduction in headcount, a decrease in working hours and overtime and other employee expense together with expense cuts in all areas.

In addition, administrative expenses also included the shutdown expense of the KCEI plant in the amount of 47.6 million baht, which was related to labor compensation payments, factory shutdown expenses, and depreciation cost on non-productive machines.