Mainboard-listed UMS Holdings has posted earnings of $1.3 million for the 4QFY2020 ended December, a 86% plunge from earnings of $9.6 million from a year ago.
The lower earnings was due to a one-off $7 million impairment of goodwill in UMS’s subsidiary Kalf Engineering and investment in its associate company JEP, as well as a $2.5 million share of goodwill impairment in JEP.
Excluding these items, UMS’s earnings should have been up by 16% y-o-y to $10.8 million.
The group’s bottom line was also affected by the softer US dollar as well as higher depreciation expenses due to new machinery and additional factory space acquired by Starke Singapore.
Earnings for the FY2020 grew 9% y-o-y to $36.5 million from the $33.6 million posted for FY2019.
SEE:Analysts positive on UMS Holdings, RHB predicts possible dividend growth
The growth came despite significant impairment costs including the impairment of goodwill in Kalf and investment in JEP, as well as a $2.1 million share of loss in the latter.
The loss in JEP was mainly due to goodwill impairment of $6.25 million; the group’s share of the loss stood at $2.5 million.
Excluding these items, the group’s earnings would have been 37% y-o-y higher at $46.0 million for the FY2020.
4QFY2020 revenue grew 9% y-o-y to $44.1 million on the back of higher demand in the semiconductor segment, which saw 13% y-o-y higher sales.
The higher sales in the segment was driven by higher Integrated System and component sales
Semiconductor Integrated System sales grew by 8% y-o-y to $21.7 million, while component sales surged 20% y-o-y to $20 million.
The group achieved record revenue in FY2020, which surged 25% y-o-y to $164.4 million as it saw “significant growth” across its core business segments.
Revenue rose in all the group’s key markets except the US, which is attributable to the continued softening of the US dollar. Other revenue fell 21% y-o-y due to lower revenue from Kalf.
Earnings per share (EPS) for the 4QFY2020 and FY2020 stood at 0.24 cents and 6.83 cents respectively on a fully diluted basis.
The group has declared a final dividend of 1.0 cent per share for the FY2020, payable on May 21.
This is compared to the total dividend of 2.5 cents per share paid out for the FY2019.
The group says the payout of 1 cent has been moderated to allow the group “greater financial flexibility in uncertain times, and to take advantage of the new growth initiatives in the short-term”.
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Looking ahead, it expects global chip demand to remain strong. According to World Semiconductor Trade Statistics, chip sales are expected to accelerate – growing at 8.4% to hit US$469 billion ($619 billion) in 2021.
It also foresees that it will remain profitable in 2021.
“The group delivered a robust performance in FY2020 as it continued to benefit from the sustained global semiconductor demand. Despite significant impairment costs, the Group did better than FY2019,” says UMS’s chairman and CEO Andy Luong.
“The board also believes that its diversification strategy remains sound as the impairment in JEP which is a non-cash accounting treatment was taken as a prudent measure against the current challenging business conditions affecting the aerospace industry. The group is confident that aviation and aerospace demand in the longer term will recover when international travel resumes; and that the impairment in JEP will be written back,” he adds.
Shares in UMS closed 2 cents higher or 1.6% up at $1.26 on Feb 25.
