Micro-Mechanics Q1 profit falls 36.4% to S$2.7 million
Michelle Zhu
MICRO-MECHANICS reported a net profit of S$2.7 million for its first quarter ended September, down 36.4 per cent from S$4.2 million in the same period last year, amid a slowing semiconductor industry.
This translates to earnings per share of S$0.0194 for Q1 FY2024, versus S$0.0305 in Q1 FY2023.
Revenue for the quarter fell 21.5 per cent year on year to S$15.9 million from S$20.2 million.
On Monday (Oct 30), the group said its topline fall was generally in line with the trend of global semiconductor sales, which was lower year on year in both July and August this year.
“During Q1 FY2024, we continued to experience significant challenges from the sudden and sharp downturn in the semiconductor industry,” added the precision tools and parts manufacturer.
In tandem with the reduction in the group’s sales, Micro-Mechanics’ average capacity utilisation rate for the quarter fell to 50 per cent compared to 61 per cent in the same period a year ago.
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Gross profit margin sank to 48.8 per cent from 51 per cent in Q1 FY2023. The group said this was because of a significant decline in business activities as compared to a year prior, resulting in an under-absorption of costs, and further exacerbated by inflationary pressures.
Administrative expenses decreased 22.7 per cent to S$2.1 million from S$2.8 million in the year prior, which the group mainly attributed to cost control measures and reduced headcount.
Other operating expenses were also down 14.8 per cent to S$1.1 million from S$1.3 million in Q1 FY2023, largely due to cost-reduction measures implemented at the group’s factory in the US.
While Micro-Mechanics said that it “regularly exceeded” the company’s dividend policy to distribute at least 40 per cent of annual earnings, it “may now be prudent” to retain a higher amount of cash than typically held on the group’s balance sheet. “Moving ahead, we will continue our strategy to grow our core businesses by maintaining a strong and unrelenting focus on the value we bring to our customers while building sustainable, competitive advantages through repeatable, scalable and cost-effective manufacturing processes,” said Chris Borch, chief executive of Micro-Mechanics.
Shares of Micro-Mechanics were trading S$0.05 or 2.7 per cent lower at S$1.80 as at the midday trading break on Monday, before the company’s results update.
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