Nanofilm posts 40% fall in Q1 revenue on cyclical reasons, slow China reopening

MAINBOARD-LISTED Nanofilm Technologies : MZH 0%, which specialises in advanced materials and coatings, posted a 40 per cent fall in revenue to S$33 million for its first quarter ended Mar 31, 2023.

Q1 is typically cyclical in line with production cycles, while revenue was also hit by China’s slow and soft recovery since its reopening, the company said in a business update on Wednesday (Apr 19).

The company said that its advanced materials business unit – which contributes around 75 per cent of its year-to-date revenue – saw relatively softer end-consumer demand as the market took time to adjust and recover from the post-China reopening.

This quarter, the segment was also weaker in comparison to Q1 2022, which saw strong results due to peak production carried forward from the fourth quarter of 2021, the company added.

The nanofabrication business unit – which contributes around 6 per cent of the group’s year-to-date revenue – also saw relatively softer end-consumer demand, which impacted the mass production schedule of its key projects.

The industrial equipment business unit – which contributes around 19 per cent of the group’s year-to-date revenue – mainly executed on last year’s backlog orders, which was a softer year as customers were cautious and cut back on capital expenditure.

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Meanwhile, its sydrogen segment – which makes up less than 1 per cent of the group’s year-to-date revenue – was able to maintain a high growth rate from its low base.

Nanofilm expects the macro environment to remain challenging, although it noted that the second half of the financial year will likely look brighter.

It expects customer activity will ramp up in H2, while post-China recovery should also present opportunities.

Shares of Nanofilm closed 2.4 per cent lower at S$1.65 on Wednesday.