Frencken Group E28 announced that its FY2022 ended Dec 31, 2022 earnings came in at $51.9 million, some 11.7% lower than $58.7 million in FY2021.
Revenue for the full year came in 2.5% higher at $786.1 million from $767.1 million last year, uplifted by the group’s mechatronics division but partially offset by a decline in the group’s Integrated Manufacturing Services (IMS) division.
Revenue at the mechatronics division improved 4.5% y-o-y to $688.5 million, due to higher sales of the semiconductor, medical and industrial automation segments.
The semiconductor segment’s revenue grew 5.2% to $305.0 million in FY2022 attributable mainly to increased orders for front-end semiconductor equipment from customers in Europe and Asia. Revenue derived from customers in the front-end semiconductor equipment accounted for around 73% of semiconductor segment in FY2022. Revenue of the medical segment increased 6.9% to $107.9 million in FY2022 on the back of a strong sales pick up in Europe and Asia during 2HFY2022. Industrial automation saw a 4.7% revenue increase y-o-y to $109.6 million, but the group notes that revenue of this segment are typically lumpy in nature and dependent on the capital expenditure requirement of a key customer.
Revenue at the IMS Division decreased 10.6% to $96.4 million in FY2022 due mainly to lower sales of the automotive and consumer & industrial electronics segments. Revenue of the automotive segment declined due to the weaker-than-expected recovery of the global automotive industry amid supply chain disruptions during the year.
The group’s gross profit decreased 7.7% y-o-y to $119.0 million in FY2022. Gross profit margin eased to 15.1% in FY2022 from 16.8% in FY2021 due to the impact of sharp inflationary cost pressures particularly at the Europe operations.
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The group also incurred higher depreciation expenses in FY2022 as a result of capital investments to upgrade and expand its global manufacturing facilities, and a one-time write-down for inventory adjustment and obsolescence at the group’s subsidiary in the USA .
For the 2HFY2022 period, earnings were 6.1% lower y-o-y at $25.7 million, while revenue was 1.4% higher at $397.2 million. Excluding the non-cash inventory write-down of $2.0 million, earnings for 2HFY2022 would be slightly higher at $27.7 million.
As at end-December, the group’s cash and cash equivalents stood at $110.3 million.
The group is recommending a final dividend of 3.64 cents per share, lower than the 4.13 cents paid out in the same period last year.
The group has cited global economic slowdown, geopolitical tensions, inflation and supply chain disruptions as challenges in 2022. It also said that FY2022 was affected by weaker-than-anticipated recovery of the global automotive industry, depreciation of the Euro against Singapore Dollar, as well as the near-term impact from strategic initiatives to expand its facilities and production capacity.
Looking forward, the business environment is expected to remain challenging in 2023 amid ongoing uncertainties and expectations of a global economic slowdown. Backed by its diverse exposure to multiple market segments in the high technology industry and its balance sheet strength, the group will continue focusing on investments in customers’ programs to ensure it is in prime position when the global economy recovers.
Shares in Frencken closed 1.74% lower on 27 Feb at $1.13.
