Nanofilm Technologies MZH has reported earnings of $25.0 million for the 2HFY2022 ended Dec 31, 2022, 43.6% lower than the earnings of $44.3 million in the 2HFY2021.
For the FY2022, Nanofilm’s earnings fell by 29.6% y-o-y to $43.8 million, which is close to Nanofilm’s previous guidance of a 30% y-o-y drop.
The lower full-year earnings were due to the challenging operating environment on the back of macro headwinds, supply chain disruptions and a slowdown in the group’s customers’ capital investment. The lower earnings for the FY2022 were also due to increased operating expenses, operational disruptions from a key final assembly, test & pack (FATP) supplier to a key customer of the group, the increase in Covid-19 cases upon China’s reopening in December 2022, as well as softer demand from the end-consumer due to recessionary fears.
2HFY2022 revenue fell by 16.0% y-o-y to $126.1 million as revenues for the group’s advanced materials and industrial equipment segments fell y-o-y. Meanwhile, revenues for the group’s nanofabrication and sydrogen grew y-o-y.
Gross profit fell by 20.9% y-o-y to $61.4 million.
Other operating income increased by 41.2% y-o-y to $4.8 million.
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Finance income surged by 154.4% y-o-y to $954,000.
Profit before income tax fell by 45.1% y-o-y to $26.7 million due to higher expenses, especially administrative and finance costs.
During the six-month period, the group also logged a loss of $24.0 million in exchange difference arising from translation of foreign operations, from the gain of $6.0 million in the corresponding period the year before.
There was a fair value gain of $425,000 from equity investment at fair value through other comprehensive income in the 2HFY2022, compared to none in the 2HFY2021.
In the FY2022, revenue fell by 3.8% y-o-y to $237.4 million due to the industrial equipment and advanced materials segment and offset by the growth in revenue from the nanofabrication and sydrogen segments.
Gross profit fell by 8.8% y-o-y to $111.4 million.
Other operating income fell by 7.2% y-o-y to $6.7 million.
Finance income surged by 60.3% y-o-y to $1.6 million due to interest income generated from higher interest rate from fixed deposits.
The group also booked an impairment loss of $51,000 in the 2HFY2022 and FY2022 from the writeback of $1.3 million in the 2HFY2021 and FY2021. This was mainly due to the recovery of impairment loss from customer in the industrial equipment segment and a decrease in expected credit loss of the group’s trade receivables and contract assets in FY2021.
Profit before income tax for the FY2022 fell by 34.0% y-o-y to $46.1 million.
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In the FY2022, Nanofilm also saw a share of loss of associate of $28,000, where there was none in the corresponding period the year before.
In the FY2022, the group logged a loss of $32.4 million in exchange difference arising from translation of foreign operations, from the gain of $13.7 million in the corresponding period the year before.
There was a fair value gain of $365,000 from equity investment at fair value through other comprehensive income in the FY2022, compared to none in the FY2021.
In the 2HFY2022 and FY2022, Nanofilm’s earnings per share (EPS) stood at 3.79 cents and 6.64 cents respectively.
As at Dec 31, 2022, cash and cash equivalents stood at $147.8 million.
Nanofilm has proposed a final dividend of 1.1 cents per ordinary share, payable on May 18. With the interim dividend, this brings Nanofilm’s total dividend for the FY2022 to 2.2 cents per share, or 33% of the group’s net profit attributable to equity holders for the year.
This is down from Nanofilm’s previous payout of two cents for the FY2021.
“We have managed a decent performance in FY2022 despite severe macro headwinds and a challenging operating environment. Despite a difficult and everchanging macro environment, we remain focused on executing our plans in our key strategic areas with the aim of achieving our 2025 target. Our Deep-Tech platform affords us many opportunities to enter different industries and to develop our own products, and we will judiciously focus and prudently apply ourselves to achieve the goals of our different business units,” says Gary Ho, group CEO of Nanofilm.
While the group sees a “challenging” outlook for 2023, it remains optimistic about the longer-term outlook of the markets it serves. This is in terms of the business opportunities that can be addressed by the group’s differentiated deep-tech solutions where it provides solutions that are based on “substantial scientific and/or engineering advances”.
“The group will strive to realise these opportunities, some of which are reaching production stages, though meaningful contributions are expected from 2024 onwards,” reads the statement released by Nanofilm on Feb 21.
The group adds that it will remain focused on four key strategic areas which are: geographical diversification and coverage, introducing new segments with capability and product expansion, joint ventures (JVs) and mergers and acquisitions (M&A) and research and development (R&D) as well as engineering product development.
“As Covid-19 risks are generally receding, the group is cautiously optimistic that the operational risks and costs associated with Covid-19 restrictions are unlikely to recur in 2023. Thus far, the China outlook for the first quarter of FY2023 remains soft and the group expects a gradual recovery in the second half of FY2023,” says the group.
Shares in Nanofilm closed 4 cents higher or 3.03% up at $1.36 on Feb 21.
