Amtek’s profit plummets 31% to US$18.8m in 1H12

As the floods in Thailand has greatly affected the supply chain of several industrial sectors.

In a financial statement, Amtek Engineering Ltd reported revenue of US$337.4 million for 1HFY12, a decline of just 1% against 1HFY11. The Group registered profit after taxation of US$18.8 million for the same period.

The Group continued to generate strong cash flows from operations of US$33.6 million in 1HFY12. Cash and cash equivalent balances stood at US$100.9 million as at 31 December 2011.

OPERATIONS & FINANCIAL REVIEW
Despite growth in demand from several industrial sectors, overall revenue for 1HFY12 declined 1% to US$337.4 million, due to the challenging business environment in 2QFY12.

The Imaging and Printing product sector grew 17% in 1HFY12 to US$31.8 million from US$27.2 million in 1HFY11 due to new customer segment wins in office automation products.

Demand for Automotive products remained positive in the PRC throughout 1HFY12.

Notwithstanding weaker demand in Europe caused by the worsening economic situation there in 2QFY12, the Group’s Automotive product sector registered a growth of 9% in 1HFY12 against 1HFY11. Despite a slowdown for Electrical and Electronics products from our Europeans customers in 2QFY12, the sector nevertheless registered growth of 16% in 1HFY12 against the previous corresponding period.

As expected, the floods in Thailand affected the supply chain of more than one industry sector.

In 2QFY12, the Mass Storage product sector was most affected by supply chain disruption to the Hard Disk Drive industry, resulting in a 16% decline in 1HFY12 revenue compared to 1HFY11.

The Casing and Enclosures product sector was also partially affected by disruption to the supply chain of HDD in 2QFY12. This, together with weaker demand from certain customers caused the sector’s revenue to decline by 5% in 1HFY12 against the previous corresponding period.

The Consumer Electronics product sector was also not spared in 2QFY12 with demand for oral care products as well as home appliances products softening due to overall weaker demand. As a result, the Consumer Electronics product sector reported a 5% decline in revenue in 1HFY12 to US$51.2 million compared to US$53.9 million reported in 1HFY11.

The Group achieved profit after taxation for 1HFY12 of US$18.8 million which was US$8.4 million (-31%) lower than 1HFY11. This was principally on account of first: lower foreign exchange gain by US$1.6 million due to the sudden strengthening of the US Dollar, the Group’s reporting currency and second: higher cost of goods sold due to lower revenue generated in 2QFY12 which caused the average fixed cost per order dollar of sales to increase in 1HFY12.

Earnings per share for 1HFY12 was 3.1 cents, compared to 4.7 cents in 1HFY11. The Group generated cash from operations of US$33.6 million in 1HFY12. The payment of a dividend of US$24.0 million in November 2011 and the repayment of bank borrowings amounting to US$27.6 million in 2QFY12 resulted in a decline in cash and cash equivalents by US$18.1 million to US$100.9 million as at 31 December 2011. As a result, the Group’s net debt as at 31 December 2011 increased to US$32.4 million.