SINGAPORE (Oct 15): Nico Steel Holdings, the specialist in ferrous and non-ferrous metal alloys, reported a higher y-o-y profit of US$121,000 ($166,833) for 1H19 compared to the US$1,000 in 1H18 on double-digit revenue growth.
Revenue for the half-year ended Aug 2018 rose 31% to US$8 million from US$6.1 million a year ago, mainly due to the increase in production and sales of Nico brand metal alloy materials which command higher gross profit margin.
The higher revenue was however partially offset by higher marketing & distribution as well as administrative expenses, which grew 22% and 10% respectively to US$269,000 and US$1.7 million, as well as the recognition of foreign exchange loss.
Commenting on its latest set of half-year results, the group says it has achieved remarkable progress with its proprietary brand of metal alloys due to increasing acceptance of the product by global market leaders in the mobile communications, automotive, and consumer electronics sectors.
Separately, Nico announced that it is commencing mass production of its proprietary brand of metal alloys meant to shield three new electronic devices from two of its customers.
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Two of the three new devices are laptops from what is only referred to by Nico as the world’s largest software company, while the other is a new drone model from “the world’s largest drone manufacturer”.
Microsoft ranked top as the largest software company on the Forbes Global 2000 list for 2018, based on market value, profit, sales and assets. Meanwhile, privately-held Chinese drone producer DJI (Da Jiang Innovations) is said to be the largest drone manufacturer in the world.
For the production of these three new devices, Nico will be supplying metal alloy materials using aluminum as the base metal to customise shielding solutions for the devices, which vary in requirements due to the size, weight, thickness and distinct functionalities.
In a Monday filing, Nico reveals that one of the laptops is targeted at school students to give them “first-hand experience and introduction to a commonly-used software program”. This means the requirements of this particular laptop model will have to be scaled down from that of the laptop meant for working adults, considering the usage patterns of students.
Increasing demand among customers for lighter, slimmer electronic devices that continue to perform better will also require upgrading, so as to encompass the management of weight, heat dissipation and electromagnetic interference.
As such, the group says that it has achieved “various breakthroughs with the global market leaders [the software company and drone manufacturer]” to meet these requirements with the Nico brand of material solutions after the last few years of R&D and marketing.
Going forward, Nico says it expects production volume for its metal alloy materials to increase as demand for these products pick up as the electronic devices are newly-launched by the said global market leaders.
However, the group does not expect a significant contribution to its revenue and earnings from its products, considering its wide base of customers and high-mix, low-volume production strategy focus.
“Nico Steel’s success is not to be based on one customer nor one product of a customer. The product lifecycle of an electronic device is getting shorter and at Nico, we are working on devices that are one to one-and-a-half years ahead of their official launch,” says Steven Tang, Executive Director of Nico Steel.
“Our Nico metal material solutions are brought in at the design stage of the proposed electronic devices and hence, at the stage of mass production of an electronic device, we would have started on the next new model with the same brand owner,” he adds.
Nonetheless, Tang says he believes Nico’s “relentless effort” meet of its customers’ requirements through its patented technological processes and product trademarks will benefit the group’s stakeholders in the long term.
Shares in Nico Steel closed at 0.8 cent on Friday.
