SINGAPORE (Oct 9): Cheung Woh Technologies plunged into losses of $5.9 million on the back of lower revenue for the second quarter ended August, compared to earnings of $1.9 million a year ago.
The manufacturer and supplier of precision HDD components saw its revenue fall 35.4% to $14.0 million in 2Q18, from $21.7 million a year ago.
The lower turnover was mainly attributable to a drop in customers’ demand for air-combs and a transition of phasing in the manufacturing of baseplates.
Despite the lower turnover, cost of sales rose 2.4% to $18.2 million in 2Q18 due to the writing off of inventory, as well as higher costs incurred for materials, labour and overheads.
Inventory written-off was due to baseplates that were damaged by heavy rainstorm caused by Typhoon Hato, as well as baseplates that failed to meet customer’s tightened specifications.
Other operating income was 20.4% higher at $1.4 million in 2Q18, mainly due to an increase in foreign exchange gain.
General and administrative expenses fell16.9% to $2.0 million in 2Q18, mainly due to lower staff costs incurred.
As at end-August, cash and cash equivalents stood at $10.2 million.
Looking ahead, Cheung Woh says turnover in the HDD components segment will continue to be affected during the transitional period of phasing in the manufacturing of baseplates, which is expected to be completed by the end of 3Q18.
Meanwhile, it adds that it has managed to negotiate for a higher selling price for its baseplates, effective from Sept 1.
Cheung Woh has not recommended any dividend for 2Q18. It had declared an interim dividend of 0.3 cent per share in the same period last year.
Shares in Cheung Woh closed 1.6 cents higher at 20 cents on Monday.
