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Sunningdale Tech Q1 profit down by 59.1% on lower revenue, margin woes

MAINBOARD-LISTED precision plastic manufacturer Sunningdale Tech’s first-quarter earnings took a tumble on a shrinking profit margin, dragged down by its automotive operations.

Net profit plummeted to S$793,000, down by 59.1 per cent year on year, for the three months to March 31. Meanwhile, group revenue slipped by 5.6 per cent to S$159.5 million, according to financial results released on Monday evening.

The fall in turnover was fuelled by a 14.5 per cent slide in automotive mould fabrication takings, which Sunningdale Tech attributed to fewer orders on “weakening demand across global automotive markets, delays in new project launches and certain projects reaching end of life”.

The gross profit margin dropped to 10.8 per cent, or 1.9 points lower than before, although chief executive Khoo Boo Hor said that margin pressures are expected to ease “in coming quarters”.

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Other income was also down, largely on the back of lower rental income after a factory in China was sold in the last quarter of 2018. The group also saw fewer government grants.

Earnings per share stood at 0.42 Singapore cent, down from 1.03 Singapore cents previously, while net asset value was S$2.02 a share, compared with S$2.00 as at Dec 31, 2018.

The group noted in its outlook statement that it faces higher labour costs, pricing pressures and “negative market sentiment”, as well as an automotive slowdown, especially in China.

Still, it added that it expects its Penang facility to ramp up utilisation and output in the second half of 2019, and is stepping up the move of its Shanghai operations to “the lower-cost region of Chuzhou”, which is expected to be done by the third quarter.

Sunningdale Tech has factories in Singapore, Malaysia, China, Latvia, Mexico, Indonesia, Thailand, India and Brazil. It has four main business segments: automotive, consumer and information technology, health care, and mould fabrication and tooling.

Mr Khoo also said that Sunningdale Tech’s health care and consumer and information technology segments notched “strong momentum” on several customer projects.

“In the automotive segment, we continue to monitor the market closely while aggressively pursuing business development initiatives to secure new projects,” Mr Khoo added. “Despite the potential challenging market conditions, we remain confident in our resilient business model.”

No dividend was recommended, unchanged from the same period the previous year.

Sunningdale Tech lost S$0.03, or 2.17 per cent, to S$1.35, before the results were announced.