KUALA LUMPUR (Aug 1): Surface engineering service provider Frontken Corp Bhd saw its net profit for the second quarter ended June 30, 2023 (2QFY2023) slip 0.89% to RM31.91 million from RM32.2 million a year earlier, on lower revenue from its Taiwan and Singapore units.

The group’s earnings per share fell slightly to 2.03 sen from 2.05 sen previously.

Frontken’s revenue dropped 5.5% to RM121.15 million in 2QFY2023 compared to RM128.20 million in 2QFY2022.

In its bourse filing on Tuesday (Aug 1), the group said the drop in revenue from its Taiwan and Singapore units was caused partly by weaker demand from its semiconductor customers flowing on from the first quarter.

Frontken added that the group’s subsidiaries in Malaysia showed better performance due to the improvement in the oil and gas industry.

“The improvement in our local business was largely due to new orders for provision of manpower supply and mechanical rotating equipment services from various contracts that the group has with the Petronas group of companies,” it commented.

For the six-month period ended June 30, 2023 (1HFY2023), the group recorded a net profit of RM55.5 million, a 5% drop from RM58.72 million in 1HFY2022.

Revenue also declined 5% to RM235.14 million in 1HFY2023 from RM247.34 million in 1HFY2022, affected by lower demand from the group's semiconductor clients.

“The Semiconductor Industry Association (SIA) announced that the global semiconductor industry sales during the month of May 2023 totalled US$40.7 billion (RM183.6 billion), an increase of 1.7% compared to April 2023 but 21.1% less than May 2022.

"Despite continuing market sluggishness compared to 2022, month-to-month global semiconductor sales inched upward in May for the third consecutive month, sparking optimism for a bigger market demand during the traditionally stronger second half of the year,” Frontken said, adding that it was hopeful to see more activities in its new second facility in Taiwan.

As for the oil and gas industry, Frontken said it was cautiously optimistic that the business will emerge stronger than last year due to increased orders from the various contracts for the provision of manpower supply, as well as mechanical rotating equipment services and parts that it has contracted with the Petronas group.

“The group remains prudent on the overall business conditions in the second half of the year despite the positive overview from SIA, considering the current geopolitical tension, rising interest rates and inflationary pressure,” it added.

At the midday break, shares of Frontken rose two sen or 0.62% to RM3.26, valuing the group at RM5.15 billion.