Micro-Mechanics posts 14.4% rise in Q2 net profit of S$3.6m

MICRO-MECHANICS (Holdings) Ltd, which makes high-precision tools and parts used in process-critical applications for the semiconductor industry, has posted a 14.4 per cent increase in group net profit to S$3.6 million for the second quarter ended Dec 31, 2019.

This is on the back of higher revenue and improved gross profit margin. Revenue rose 7.4 per cent to S$16.3 million, with higher sales in China, Singapore, Japan and Taiwan offsetting lower sales contributions from the Philippines, Malaysia and European markets. 

The group said it continued to work on various operational strategies such as set-up time reduction, higher automation and smart-factory initiatives which helped to widen its gross profit margin to 53.9 per cent in Q2 FY2020 from 52.4 per cent in Q2 FY2019.

In a news release issued on Saturday, Micro-Mechanics' chief executive officer Chris Borch said: "The group's results in Q2 FY2020 marked the first year-on-year growth in our quarterly revenue since Q4 FY2018. We believe this reflects the improving stability of the global semiconductor industry from the cyclical downturn that began during the second half of calendar year 2018. The higher revenue, coupled with our continuous efforts to enhance manufacturing processes, productivity and cost structure, drove the improvement in the group's profitability during Q2 FY2020."

Earnings per share rose to 2.57 Singapore cents in Q2 FY2020 from 2.25 cents in Q2 FY2019. Net asset value per share dipped to 40.76 Singapore cents as at Dec 31, 2019 from 41.98 cents as at June 30, 2019.

The group said that recent data from the World Semiconductor Trade Statistics (WSTS) indicates that the global semiconductor industry is beginning to stabilise and the WSTS is projecting worldwide chip sales to recover in 2020 with growth of 5.9 per cent.

Micro-Mechanics ended four Singapore cents lower at S$1.81 on Friday.

For the first half ended Dec 31 last year, net profit fell 10.3 per cent to S$6.8 million, with revenue easing 1.3 per cent to S$31.6 million.

Micro-Mechanics said that as at Dec 31 last year, the group maintained its sound financial position with total assets of S$67.7 million, shareholders' equity of S$56.7 million, cash and cash equivalents of S$19.2 million and no bank borrowings.

"Based on Micro-Mechanics' steady performance, sound financial position, modest capital requirements for FY2020 and encouraging long-term business outlook", the group is raising its interim dividend to five Singapore cents per share from four cents per share a year ago. The interim dividend will be paid on Feb 28, 2020 to shareholders on record as at Feb 19, 2020.

After due consideration, the board has elected to continue with quarterly reporting.