SINGAPORE (Aug 12): InnoTek reported 2Q17 earnings of $0.5 million, $1.8 million lower than the earnings of $2.3 million in 2Q16.
The weaker bottomline was the result of wholly-owned precision metal components manufacturer Mansfield Group recording a profit of $0.8 million in 2Q17, $1.6 million lower than 2Q16.
This was due to lower gross profit margin, higher administrative expenses, higher tax expense and an exchange loss $0.4 million during the quarter.
In 2Q17, Group revenue declined $1.6 million to $49.0 million from $50.6 million in 2Q16 following the faster-than-expected pull-out of major office automation customers from China to lower-cost countries in Southeast Asia.
Sales from automotive products were also slightly lower as current programmes near end-of-life, while mass production from newly secured automotive programmes will only start next year. The decline was partially offset by higher TV bezel and tooling sales.
Gross profit dropped to $7.7 million in 2Q17 from $8.5 million a year earlier. Gross profit margin declined to 15.8% from 16.7% over the comparative periods due to lower revenue.
The higher tax expense of $0.3 million is mainly attributable to profits from Magix Mechatronics, which has fully utilised its losses carried forward from previous years.
For 1H17, the group recorded earnings of $3.1 million, higher by $1.3 million compared to earnings of $1.8 million in 1H16.
As at end June, cash and cash equivalents stood at $31.2 million as at end June, compared to $30.1 million six months ago.
InnoTek says it intends to add new products to its portfolio to mitigate the drop in orders for office automation. It will also extend its product range to include children’s car seats and a heat-sink product under the automotive and TV business segments, respectively.
It has started accepting orders for its heat-sink product, which will be used for TVs and computers, and expects to start delivering orders to customers by end of the year.
As announced in April, the group incorporated wholly-owned subsidiary, Mansfield (Thailand) Co. as part of its effort to support a major customer who has relocated to Thailand.
All operational activities in Thailand will be supported from Dongguan, China, until the production starts in Mansfield Thailand in the second half of FY2018.
Lou Yiliang, Chief Executive Officer of InnoTek, says, “We continue to focus on strengthening the business for this year. Internal efficiencies, new customer acquisitions and new product innovations will be the main initiatives for our next phase of restructuring. With the orders coming through for our heat-sink product, we hope to build on this momentum as we strengthen our portfolio.”
“FY2017 will likely be a crucial transitional phase as we work on both our restructuring efforts as well as our Thailand investments. We will focus on setting up the Thailand plant while also striving to continuously expand our customer base,” he adds.
Shares in InnoTek closed at 40 cents on Friday.
