Nanofilm warns of expected H1 loss on lower revenue
Tessa Oh
NANOFILM Technologies is expected to report a net loss of approximately S$8 million for the six months ended Jun 30, 2023 due to a fall in revenue.
The mainboard-listed company, which specialises in advanced materials and coatings, said in a regulatory filing on Monday (Jul 10) it is expecting to post a 34 per cent fall in revenue to S$73 million for the half year ended Jun 30, 2023.
Nevertheless, the group will continue to recognise a positive earnings before interest, taxes, depreciation and amortisation for the period.
Nanofilm attributed the weaker performance to several market-related factors. Ongoing macroeconomic challenges, such as persistent inflationary pressures, high interest rates and geopolitical tensions, have led to reduced consumer discretionary spending that has impacted demand, said the company.
A softer-than-anticipated reopening recovery in China in the first half had also affected demand. Additionally, weaker demand across the broader consumer electronics sector has significantly impacted the group’s advanced material business unit, particularly its computer, communication and consumer segment, as well as its nanofabrication business unit.
Meanwhile, the group’s industrial equipment business unit has been impacted as a result of a reduction in capital expenditure by customers due to more cautious market sentiment.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
Nanofilm was also affected by increased operating expenses connected to the group’s investments in long-term business initiatives to drive future growth, including costs related to new facility set-ups in Zigong and Huizhou in China, ongoing business-building expenses related to Sydrogen, as well as higher depreciation expenses associated with capital investments in new production facilities.
To mitigate these challenges, the company has implemented cost-reduction measures in manpower, overheads and other operating expenses.
“Nanofilm remains fully focused on delivering its long-term growth through the execution of its market expansion strategy,” it said, adding that it will focus on the three end-markets on consumers, industrial and new energy, and will be driven through multiple business models such as equipment sale, coating as a service, component production, and value-chain integration.
Despite the weak performance in the first half, Nanofilm expects revenue for the second half of FY2023 to be higher than the first half of the year, and to be profitable for FY2023. This outlook assumes that current macroeconomic challenges do not worsen.
Given the current challenging environment, Nanofilm noted that it would be deferring its 2025 target of attaining S$500 million in revenue and S$100 million in profit after tax and minority interest to “a later time when there is better visibility”.
Further details of the group’s financial performance will be disclosed in the company’s unaudited consolidated financial results announcement for 1H2023, which will be released on Aug 10.
Shares of Nanofilm closed flat at S$1.34 on Monday, before the announcement.
Copyright SPH Media. All rights reserved.
