ELECTRONICS components manufacturer Memtech International on Monday posted a net profit of US$2.1 million in its fiscal second quarter, down 56.9 per cent from the same period a year earlier, as margin compression offset a rise in revenue.

Revenue in the three months ended June 30 rose 19.1 per cent to US$45 million, led by the automotive segment where revenue jumped 32.6 per cent to US$22.3 million.

However, gross profit margin dropped to to 14.7 per cent from 17.3 per cent in the same period a year earlier. Higher raw material prices, product packaging cost, staff cost and an increase in the outsourcing of tooling squeezed margins, the group said.

Other income fell 83.7 per cent to US$602,000 from US$3.7 million in the same period last year in the absence of a one-time gain amounting to US$3.1 million from the sale of the group's land and factory in Huzhou, China in the second quarter last year.  

Excluding one-off items, the group would have reported a net profit decline of 20.3 per cent instead of 56.9 per cent, Memtech said. The items comprised a net gain from the liquidation of a subsidiary in quarter under review and the disposal gain as a result of the group's sale of its land and factory in Huzhou, China, in the year-ago quarter.

Sales and marketing expenses rose 43.2 per cent to US$2.4 million, owing to an increase in salaries for sales and marketing staff, and an increase in transportation costs.

General and administration expenses rose 10.1 per cent to US$3.2 million, due mainly to higher staff costs arising from annual salary adjustments.

Second-quarter earnings per share was 1.5 US cents, down from 3.5 US cents a year ago.

Net asset value per share was 87.3 US cents as at June 30, down from 90.1 US cents as at Dec 31 last year.

Looking ahead, Memtech said: "The overall business landscape remains challenging due to rising competition, foreign exchange rate volatility, rising labour costs and a more cautious market sentiment as a result of the ongoing trade tensions. 

"Entering into the seasonally stronger second half of the year, new projects in the automotive and consumer electronics segments remain on track for mass production... Barring any unforeseen circumstances, the group remains confident of its economic prospects."

Memtech shares fell 8.94 per cent to S$1.12 as at 9.55am on Monday.