Frencken Group E28 has reported earnings of $5.2 million in the 1QFY2023 ended March 31, 59.5% lower y-o-y.
The reduced earnings come amid the steep cyclical downturn in the semiconductor industry and the ongoing macroeconomic headwinds.
Due to the same reasons, revenue for the quarter fell by 13.0% y-o-y to $172.5 million. During the quarter, Frencken’s revenue for its mechatronics division fell due to the sharply lower sales of the industrial automation and semiconductor businesses at its Asia operations which more than offset the more robust sales from its European operations.
Its IMS division also saw lower revenue in the quarter due to decreased sales of the automotive and consumer & industrial segments.
Gross profit margin fell by 3.1 percentage points y-o-y to 12.3% as the revenue decline was also coupled with continuing inflationary cost pressures and higher depreciation expenses due to the group’s capital investments to upgrade and expand its global manufacturing facilities.
As at March 31, cash and cash equivalents stood at $162.3 million.
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As at the same period, the group’s total debt-to-equity ratio stood at 28.7%.
Looking ahead, the group expects its business environment to remain challenging for the rest of 2023 amid the ongoing global geopolitical and economic uncertainties, and the cyclical downturn in the semiconductor industry.
“Given the challenging operating conditions, the group maintains a cautious view for FY2023. Based on current indicators and barring unforeseen circumstances, the group expects revenue in 1HFY2023 to soften compared to 2HFY2022,” it says in its results statement on May 19.
However, it remains confident of weathering the current headwinds due to its “diverse exposure to multiple market segments in the high technology industry and the strength of its balance sheet”.
“[The group] will continue to focus on investments in programs for existing and new customers,” it adds.
For the 1HFY2023, the group’s semiconductor and industrial automation segments are expected to see revenue declines while the analytical and life sciences segment’s revenue is expected to increase. The medical and automotive segments are expected to remain stable.
