SINGAPORE (April 24): Cheung Woh Technologies has declared $3.6 million in earnings for FY2017, a 64.8% decline from the $10.2 million earnings for the year ended 2016.
Group turnover fell 9.7% to $84.1 million from $93.2 million in the previous year, mainly due to lower sales recorded in the hard disk drive (HDD) components segment.
At the same time, cost of sales decreased marginally by 0.3% to $72.9 million from $73.1 million in FY16, and did not decrease in line with the lower turnover due to higher material, labour and overhead costs incurred during FY17.
Distribution and selling expenses, too, declined marginally by 1.6% to $3.1 million – although general and administrative expenses fell by 21.4% to $9.2 million mainly due to decreases in foreign exchange (forex) loss and loss on disposal of property, plant and equipment.
The overall higher costs were also attributed to abnormal high yield loss due to the writing off of defective baseplates produced during its initial production, adds the group in its Monday aftermarket filing to the SGX.
Other operating income for the year came in 14.1% lower at $3.7 million as compared to $4.3 million a year ago, which was largely attributable to lower sales of scrap metal as well as lower income.
During the financial year, Cheung Woh’s share of results of associate companies, which represents the group’s interest in the profit after tax of Jiangsu Tysan Precision Engineering (TP Group), recorded higher revenue and profits.
In its outlook, Cheung Woh says it expects its turnover in HDD components segment to continue to be affected during its transitional period of phasing-in the manufacturing of baseplates, which it anticipates to last until 3Q18.
While the group thinks its precision metal stamping (PMS) components segment will do well, it is in the view that the volatility in forex may pose uncertainties to its business going forward.
Shares of Cheung Woh closed flat at 19 cents on Monday.
