Micro-Mechanics Holdings (MMH) has reported earnings of $4.2 million for the 1QFY2023 ended Sept 30, 14.6% lower than the earnings of $5.0 million in the corresponding quarter the year before.
1QFY2023 earnings per share (EPS) stood at 3.05 cents on a fully diluted basis, down from 3.57 cents in the same period the year before.
Revenue for the quarter dipped by 1.3% y-o-y to $20.2 million due to the moderation of growth of the global semiconductor market since the middle of this year. That said, the group’s revenue was supported by the double-digit growth in sales to customers in Singapore and the US. This was offset by a slowdown of orders in the China market as customers there had previously raised their stock holdings of the group’s products when the chip industry was experiencing supply chain disruptions.
Nonetheless, the Chinese market remains the group’s largest market by geography with sales of $5.5 million accounting for 27.4% of the group’s revenue for the quarter. MMH’s second largest market, the US, registered an increase in sales of 21.3% y-o-y to $4.9 million, contributing to 24.0% of the group’s overall revenue.
In the 1QFY2023, cost of sales increased by 8.6% y-o-y to $9.9 million due to inflation and challenges in the supply chain.
As a result, gross profit for the quarter fell by 9.2% y-o-y to $10.3 million.
The group’s gross profit margin (GPM) fell by 4.5 percentage points y-o-y to 51.0% in the 1QFY2023, remaining above its threshold margin of 50.0%.
During the quarter, other income surged by 74.3% y-o-y to $187,703. This was due mainly to the absence of loss on disposal of property, plant and equipment amounting to $12,000, higher interest income of $27,000 and a foreign exchange gain of $29,000, says the group.
Profit from operations fell by 15.2% y-o-y to $5.6 million.
As at Sept 30, cash and cash equivalents stood at $25.1 million.
No dividend was declared during the quarter.
“With the global semiconductor industry widely expected to record slower growth in the coming months, it is a timely reminder to us of the importance of building an organisation that has strength and resilience. Whether it is the adverse impact from such industry downturns, disruptive technologies, geopolitical unrest or other unforeseen events, we recognize that having goals, structures and processes in place will make it easier for Micro-Mechanics to adapt to changes in the operating environment and ensure a sustainable business,” says MMH’s CEO Chris Borch.
Borch adds that the group’s new approach of focusing on continuous improvement and process excellence to ensure its longevity will “help to accelerate learning and development activities”.
“[It will also] make each of our plants even stronger while giving our people the opportunities to gain experience and develop leadership skills. Of course, having strong executive leadership, backed by a diverse, experienced and committed board of directors, are also key factors that will drive Micro-Mechanics’ continuing success,” he says.
Shares in MMH closed flat at $2.76 on Oct 28.