MICRO-MECHANICS on Friday (Oct 28) posted a 14.6 per cent decline in net profit to S$4.2 million for its first quarter ended Sep 30 compared with S$5 million the previous year.
This marked the end of four consecutive quarters of growth for the manufacturer of high-precision tools and parts for the semiconductor industry, due to a combination of slightly lower revenue, increased costs and margin declines.
Group revenue for the quarter fell by 1.3 per cent to S$20.2 million, from S$20.5 million in the equivalent period the year before.
The lower top-line was mainly due to a slowdown in orders in the Chinese market compared to the previous year, when customers raised their stock holdings of the company's products amid supply chain disruptions. China nonetheless remained the largest contributor to the company's Q1 2023 revenue.
Double-digit growth in sales to customers in Singapore and the US helped to partially offset this decline, with contributions from both markets growing year on year due to the acquisition of new major customers.
Earnings per share stood at 3.05 Singapore cents, down from 3.57 cents a year ago.
Notably, group gross profit margin for the quarter fell by 4.5 percentage points to 51 per cent from 55.5 per cent previously, which Micro-Mechanics attributed to inflationary pressures and supply chain challenges.
The group maintains that gross profit margin for Q1 FY2023 remains healthy and above its threshold of 50 per cent - adding that it intends to continue its "relentless focus" on working to strengthen its gross profit margin.
Looking ahead, Micro-Mechanics expects rapidly rising costs to continue putting pressure on its gross profit margin, but said it remains focused on streamlining its operations while keeping a tight rein on expenses.
Shares of Micro-Mechanics were trading unchanged at S$2.76 as at 3 pm on Friday, after the earnings announcement was released during the midday trading break.