SINGAPORE (Feb 12): Karin Technologies announced 1H18 earnings dropped 73.9% to HK$3.23 million ($0.55 million), compared to HK$14.1 million in 1H17.

Revenue for the six months ended Dec was HK$1.05 billion, 11.7% more than HK$943.5 million in the same period last year.

Revenue from the group’s components distribution segment was 3.1% higher at HK$455.2 million, from HK$441.6 million, mostly due to rise in demand for certain electronic components for smartphones and wireless application devices.

Revenue from the information technology infrastructure segment increased by 20.5% to HK$567.7 million from HK$471.1 million, mostly due to strong demand in network security products and cloud solution services.

Revenue from consumer electronic products segment increased slightly by 0.3% to HK$30.9 million from HK$30.8 million.

Cost of sales was 14.3% higher at HK$979.2 million compared to HK$856.9 million a year ago.

Consequently, gross profit for the period was HK$74.6 million, 13.9% lower than HK$86.6 million in the previous year.

The decrease in gross profit was mostly due to fierce competition in all three business segments; and write-down of HK$4.4 million (31 December 2016: reversal of write-down of HK$0.5 million) of inventories to net realisable value and write-off of obsolete inventories.

Other income and gains doubled to HK$4.0 million from HK$2.05 million a year ago. The increase included exchange gains of HK$2.0 million.

Finance costs increased by 27.1% to HK$1.6 million from HK$1.2 million  a year ago, mainly due to increase in working capital requirements.

Share of profit from an associate dropped 81.3% to HK$99,000 compared to HK$529,000 last year.

The group has declared a cash interim dividend of 6.8 HK cents per share, which will be payable on March 15.

Raymond Ng, executive chairman and CEO of Karin says, “Smartphone makers are releasing more high-end models into the market. There has also been an increase in the functions that are embedded in smart home and medical appliance. Project based application specific integrated circuits are expected to materialize. As such, we anticipate the demand for components for such products to continue.”

“With the increasing awareness about cybersecurity and more companies opting for cloud storage, we also expect our IT Infrastructure segment to continue generating strong sales in its network security products and cloud solution services,” adds Ng.

Shares in Karin closed 3 cents higher at 35 cents on Monday.