(Alliance News) - Global Invacom Group Ltd on Friday said it swung to a loss in 2019 due to impairments on loans and on the closure of its Shanghai manufacturing facility.
The satellite communications equipment and electronics company reported USD8.2 million of other operating expenses in 2019, compared to just USD14,000 the year before. This dragged the company down to a USD12.5 million loss from a USD2.1 million profit in 2018.
Nearly all operating expenses were incurred in the fourth quarter and relate "primarily to the impairment of equipment and other receivables in the Shanghai manufacturing facility, impairment of goodwill in one of the UK manufacturing facilities, as well as the impairment of loans".
Global Invacom is relocating its manufacturing facility to the Philippines from China due to "increased pressure on wages and production costs in China". Given this, the firm incurred one-off charges from closing the Shanghai facility in 2019.
Revenue was higher, however, up 10% at USD134.5 million compared to USD122.3 million in 2018.
The company noted the coronavirus outbreak, which originated in China and has spread elsewhere, as well as continued US-China trade tensions.
Global Invacom said: "Apart from the economic uncertainty as a result of the ongoing trade tensions between the US and China, the group is also mindful of the COVID-19 outbreak which has disrupted many businesses operating in China and the risk around its supply chain of components. The group has established a core team of approximately 30 supply chain specialists located in Shanghai to source such products. This team is closely monitoring the situation to ensure stable supplies to the Philippines and US although we believe it is too soon to comment on its long-term impact for the business."
Executive Chair Tony Taylor said: "We are delighted with the progress we have made in 2019 and believe the decisive actions taken by management to restructure the business will ensure that the group is well placed to capitalise on a number of growth opportunities. Our transition to the Philippines which will continue over the course of the first six months of 2020 will help protect our overall margins, now unencumbered by tariffs and increasing production costs in China.
"The demand for satellite communications solutions continues to gain momentum as operators strive to put in place infrastructure that is capable of responding to the ever-increasing demand for connectivity and data regardless of location. The group continues to be uniquely positioned to supply antenna and electronics products, and with our blue-chip customer base and industry reputation, we feel we are very well placed going in to 2020 to drive further growth.
Global Invacom shares in London were down 3.6% at 6.27 pence each on Friday afternoon.
By Anna Farley; annafarley@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.