SINGAPORE (Nov 6): Nera Telecommunications (NeraTel) has swung back to profitability in 3Q17, posting earnings of $2.0 million from a loss of $1.3 million in 3Q16.
The group’s revenue for the third quarter ended September came in 24.9% higher at $42.2 million compared to $33.8 million in the previous year, largely driven by higher turnover from both the network infrastructure and wireless infrastructure network business segments.
The group’s network infrastructure segment reported a 21.0% increase in revenue to $24.8 million compared to $20.5 million last year, mainly due to higher turnover booked from service provider markets in Singapore and Australia.
The wireless infrastructure network segment saw a 30.8% increase to $17.4 million from $13.3 million last year, mainly driven by higher turnover from Middle East and Africa markets, but partially offset by lower turnover from Thailand and Philippines.
Similarly, cost of sales increased 10% to $30.2 million from $27.4 million last year.
This brought gross profit for 3Q17 to $12.0 million, 89.1% more than $6.4 million recorded the same period last year.
Meanwhile, gross profit margin increased to 28.5% from 18.8%, due to higher gross profit margin from equipment sales and higher writeback from project closure.
Other operating income dropped 80.9% to $69,000 from $362,000 a year ago.
Total operating expenses for 3Q17 increased by 6.0% to $9.1 million from $8.6 million a year ago, mainly due to higher administrative expenses, but was partially offset by lower distribution and selling expenses as well as lower other operating expenses.
Administrative expenses increased by 54.9% to $2.81 million compared to $1.81 million a year ago.
This was mainly due to allocation of expenses to the PS business in prior periods, over three as compared to two business units currently. The rise in administrative expenses was also due to higher payroll and staff related costs and other administrative costs.
Distribution and selling expenses were 5.3% lower at $5.76 million from $6.08 million last year.
Other operating expenses dropped 23.2% to $510,000 from $664,000 a year ago, mainly due to the lower exchange loss. In 3Q16, there was higher exchange losses from the devaluation of the Nigerian Naira against the USD and the devaluation of the USD against the SGD.
Going forward, the group will leverage on its strengths – ability to offer turnkey solutions; sizeable geographical reach; deep expertise from owning one of the largest pool of certified engineers in this part of the world; strong management team; strong balance sheet for financial flexibility – to grow its solutions and services revenue and aggressively drive sales to enhance shareholder value.
Concurrently, it also maintains a long-term view to ensure sustainable growth and will continuously capitalise on growth opportunities through vertical extension of its value chain.
Shares in NeraTel closed 37 cents on Monday.