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Frencken Group doubles Q4 net profit on jump in mechatronics revenue

MAINBOARD-LISTED technology solutions provider Frencken Group saw earnings almost double in the fourth quarter on a jump in turnover, according to unaudited financial statements released on Thursday.

Net profit stood at S$11 million for the three months to Dec 31, up 99.9 per cent on the previous year, while revenue was 40 per cent higher at S$175.7 million.

Revenue fell across the board in the integrated manufacturing services unit on lower automotive and tooling sales. But Frencken's performance was underpinned by the core mechatronics division, which posted growth in all segments but also saw a hefty surge in the industrial automation segment.

The industrial automation segment saw sales jump by 548.4 per cent in the quarter to S$53.5 million on more orders for storage drive production equipment from a key customer.

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Frencken noted that this segment "is typically lumpy in nature". Still, it added in its outlook statement that revenue "is anticipated to post robust year-on-year growth in Q1 2019, driven by increased orders for storage drive production equipment from a key multinational customer in Asia".

Sales in Frencken's analytical and medical segments both grew on higher demand from key customers, while growth in orders for front-end semiconductor equipment was partly offset by a slowdown in sales of back-end semiconductor equipment.

Semiconductor revenue is expected to decline in the first quarter, but Frencken added that "an expected increase in new product introductions for front-end semiconductor equipment will help to buffer against the general slowdown in demand for semiconductor equipment".

Earnings per share rose to 2.62 Singapore cents for the quarter from 1.32 cents before.

Net asset value was 62.84 Singapore cents a share against 59.37 cents as at Dec 31, 2017.

Net profit for the full year slid 10.2 per cent to S$30 million, despite a 21.5 per cent rise in revenue to S$625.8 million on higher income tax expenses.

The board has recommended a dividend of 2.14 Singapore cents per ordinary share for the full year, down from the 2.39 cents per ordinary share paid out in the year before.

Frencken added S$0.02 or 5 per cent to S$0.42 before the results were released.