Sunningdale swings into red on global slowdown in automotive sales

SUNNINGDALE Tech swung into a net loss of S$1.1 million in the second quarter, reversing from a net profit of S$9.7 million in the same period a year earlier.

Revenue in the three months ended June 30 was S$163 million, a fall of 10.3 per cent.

The decline was due primarily to the automotive segment which was impacted by a worldwide slowdown in automotive sales (especially in China) and certain projects reaching end-of-life, it said.

Revenue from the automotive segment fell 15.5 per cent to S$60 million.

Revenue from the Consumer/IT segment fell 7.6 per cent to S$62.3 million on weak market sentiment. In addition, Sunningdale had made a strategic decision to exit the lower-margin business of a particular customer in February 2019.  

The group's gross profit margin declined 3.1 percentage points to 9.6 per cent, due mainly to lower utilisation as a result of a decline in orders, lower utilisation during the initial start-up phase at the group's new plant in Penang and the relocation of the group's Shanghai operations to Chuzhou. 

An interim dividend of three Singapore cents per share is payable on Sept 11, unchanged from a year earlier.

Second-quarter loss per share was 0.57 Singapore cent against earnings of 5.15 Singapore cents per share in the same period a year earlier. 

Sunningdale said in its results filing on Tuesday that it continues to face pressure from rising labour costs, utility costs, price pressure and negative market sentiment in light of global trade tensions.  

The group expects production and utilisation at its Penang facility to gradually improve in the second half.

Similarly, the group has accelerated the shift of its operations from Shanghai to the lower-cost region of Chuzhou, it said. Completion of this shift is expected to take place by the third quarter.

Sunningdale said: "The group continues to monitor the global automotive market closely while aggressively pursuing new projects. Within the healthcare segment, the group continues to garner momentum, having secured new projects from new and existing customers. Similarly, the consumer/IT and mould fabrication segments remain stable.

"Looking ahead, the group will focus on tightening cost controls and enhancing capacity utilisation. Barring any unforeseen circumstances, the group expects to report a stronger second-half as compared to the first-half."

Net asset value per share was S$1.94 as at June 30, down from S$2.00 as at Dec 31 last year.

Sunningdale shares fell five Singapore cents or 3.76 per cent to S$1.28 on Tuesday before the results were announced.