Nanofilm H2 net profit falls 56.9%; retains profitability in FY23 despite H1 loss

MAINBOARD-LISTED Nanofilm Technologies, which specialises in advanced materials and coatings, posted a net S$10.8 million profit for the second half ended Dec 31, 2023, down 56.9 per cent from the S$25 million made in the year-earlier period.

But despite the first half’s losses, the group still managed to pull a full-year profit of S$3.1 million, although this is still down 92.8 per cent from S$43.8 million in profits posted in the previous financial year. 

In its bourse filing on Monday (Feb 26), the company attributed the recovery in H2 business performance from the first half to its cost optimisation efforts and a rebound in revenues – the latter half’s topline rose 42 per cent on the half to S$103.9 million, from just S$73.2 million in the first half.

Compared to the year-earlier period, H2 revenue was still down 17.6 per cent, however.

The full-year revenue came in 25.4 per cent lower, at S$177 million. 

The drop in operating costs was achieved through the 8.7 per cent fall in the group’s H2 administrative expenses to S$21.9 million, and the 19.4 per cent fall in the same half’s research and development (R&D) and engineering expenses to S$9.4 million.

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The group attributed the drop in R&D and engineering expenses to an increase in the “capitalisation” of eligible activities, describing them as “moving closer to commercialisation”.

With this, Nanofilm highlighted in a statement accompanying the release of its results that the business has remained profitable with a positive operating cash flow, with S$39 million in net cash generated from FY23’s operating activities, despite the “tough environment” that it was operating in.

Earnings per share came in at 1.65 Singapore cents, from earnings per share of 3.8 cents a year earlier. 

“Combining revenue drivers and cost optimisation, the group expects FY24 financial performance to achieve higher revenues and profits, contingent upon absence of major unexpected events,” it added.

The group derives its revenue from four business segments. Of which, three of its largest segments reported a drop in takings of between 16 and 40.5 per cent in FY23.

Notably, revenue for its biggest segment – the advanced materials business unit – fell 24.4 per cent to S$141.5 million, from S$187.2 million in FY22, on lower revenue contributions from consumer electronics, communication and computers (3C) products.

The drop in revenue from the 3C subsegment is partially offset by a rise in revenue from its automotive product subsegment, the group noted.

Meanwhile, the group’s finance costs grew 55.6 per cent to S$1.9 million in FY23.

As at Dec 31 2023, the group’s cash and cash equivalents amounted to S$155.2 million, up 5 per cent from S$147.8 million a year ago.

The group has proposed a final dividend of 0.33 Singapore cents per ordinary share to be paid on May 20, if shareholders approve it at the company’s upcoming Apr 26 annual general meeting.

Shares of Nanofilm closed at S$0.735, up 2.1 per cent or S$0.015, on Monday, prior to the announcement.