PETALING JAYA: Greatech Technology Bhd more than doubled its net profit for its second quarter ended June 30 from the previous year’s corresponding quarter.

       The company reported its net profit for the latest second quarter rose to RM38.38mil from RM17.63mil in the same quarter a year ago.

       Revenues in the respective periods were higher by 142.53% year-on-year to RM136.36mil driven by higher revenue that was recognised for production line systems in the electric vehicle (EV) energy storage industry.

       “During this quarter, the group has recorded an overall increase in the total revenue recorded from the increase in production line systems, offset by the decreased single automated equipment and provision of parts and services revenue,” the company said in its financial statement notes to Bursa Malaysia.

       Greatech said margins were lower in the most recent quarter and it was impacted by higher raw materials and freight costs, which was partially offset by favourable subcontract expenses.

       “To mitigate the transportation dislocation challenges, the group has made the conscious decision to incur extra freight cost to ensure we can better meet the commitment to the customers, given the supply chain issues that is faced globally,” it said.

       “The higher freight cost was also due to the request by customers to change shipping methods from sea to air freight and the additional cost is expected to be recoverable.

       “Nonetheless, considering the material and freight cost headwinds faced, the group was able to deliver resilient gross profit margins,” it added.

       Commenting on its pretax profit of RM38.76mil in the latest second quarter, Greatech said this was driven primarily by the increase in gross profit of RM27.46mil.

       But this was offset by a lower other income of RM650,000 and higher administrative and marketing expenses of RM5.93mil.

       “The increase in administrative and marketing expenses was mainly attributable to the share-based payment transaction recognised upon the acceptance of the employee stock ownership plan offered to employees as well as the increased employee headcount of local and North American subsidiary,” it said.

       The group said it had been affected by near-term upward pressures on freight prices and logistical challenges due to global transportation capacities that was linked to the pandemic.

       Moving forward, it foresees improved demand highlighted by a continued pickup activity in the end markets of solar thin film and EV energy storage that will present attractive organic growth opportunities.

       “The group remains confident that it will continue to gain market share in the improving market conditions and deliver further improvements in the second half financial performance,” it said.