Nanofilm H1 profit dips 3.1% to S$17.9m; COO quits

NANOFILM Technologies International's MZH : MZH 0% net profit fell 3.1 per cent to S$17.9 million for the first half of this year, from S$18.5 million in the year-ago period, amid higher costs in manpower and manufacturing overheads.

In a separate filing, the company also announced that its chief operating officer (COO) Ricky Tan has resigned to pursue other opportunities, following the group's re-organisation.

Nanofilm's dip in earnings came despite revenue improving 24.2 per cent to S$96.6 million for the six months ended June 30, from S$77.8 million in the corresponding period last year.

The topline growth was led by its advanced materials business unit, which saw an 18.5 per cent increase in revenue to S$76 million, and the industrial equipment business unit, which clocked an 80.8 per cent surge to S$19 million.

However, the nanofabrication business unit's revenue tumbled 47.8 per cent to S$1.7 million, primarily due to the end of life of projects.

Earnings per share stood at 2.71 Singapore cents for H1 2021, down from 3.59 cents in H1 2020.

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Increased expenses related to the new Shanghai Plan 2 and new equipment qualification costs to enable production weighed on the bottom line, the nanotechnology solutions provider said.

Also dragging down net profit were costs involving new product introduction (NPI) projects, which have yet to contribute materially to the group's top line as they have not reached mass production.

The group is continuing to invest in NPI projects that may potentially create revenue streams beyond this year.

Nanofilm's board declared an interim dividend of S$0.01 per share for the first half ended June, down from S$0.019 per share in the year-ago period.

The dividend will be paid to shareholders on Sept 8, after the books are closed on Aug 30.

Shi Xu, Nanofilm's executive chairman, said: "Despite a challenging operating environment caused by global supply chain disruptions, we continued to post revenue growth, underscored by an increasing adoption of our proprietary nanotechnology solutions."

The company has entered a "typical high-activity season" in H2 2021, and is building its business pipeline with strategic projects in existing and new markets, Dr Shi added.

Meanwhile, Mr Tan, 59, will step down as group COO on Aug 16, after about one year in the role during which he managed and controlled the international business operations.

Nanofilm said it had re-organised its reporting structure and assigned responsibility to the respective business-unit heads to oversee the overall operations and performance of each business unit.

After the reorganisation and a period of sabbatical leave by Mr Tan due to personal reasons, the group explored options in respect of his roles and responsibilities, based on prevailing business needs. He then decided to leave Nanofilm after "having carefully considered the options discussed", the company said.

Shares in mainboard-listed Nanofilm fell 1.3 per cent or S$0.08 to close at S$5.97 on Friday, before it announced its results and Mr Tan's resignation.