Sam Engineering’s earnings down 13% in 1QFY2024 amid lower revenue, higher finance and operating costs

KUALA LUMPUR (Aug 15): Sam Engineering & Equipment Bhd’s net profit fell 12.73% to RM20.53 million or 3.79 sen per share for the first quarter ended June 30, 2023 (1QFY2024), from RM23.53 million or 4.35 sen per share a year ago, as lower gross profit was further impacted by impairment losses as well as higher operating and finance costs.

In the group's bourse filing on Wednesday (Aug 16), it said profitability was also hit by other operating expenses which jumped nearly fourfold to RM4.56 million, from RM1.17 million previously, and higher net finance costs of RM6.35 million, which also surged more than five times from RM1.14 million previously.

Its profit was also impacted by higher distribution and administrative expenses of RM14.32 million, up 9.56% from RM13.07 million a year ago, as well as a net loss on impairment of financial instruments and contract assets of RM389,000, versus a net gain of RM949,000 a year ago.

Revenue for the quarter also decreased by 13.02% to RM307.89 million, from RM353.97 million a year before, given the lower contribution from the equipment segment, dragged by lower sales and higher interest expense, but mitigated by an increase in revenue contribution from the aerospace segment amid an increase in sales and government grant received.

On its prospect, the group said it is increasing production rates at a steady pace as the aerospace industry works to overcome supply chain constraints to recover to pre-pandemic levels by 2024/2025.

It also quoted data provided by Airbus and Boeing, which added another 1,000 aircraft into their backlog order during the Paris airshow in June 2023 — claiming that its products are used in the majority of these aircrafts.

It also cited the semiconductor equipment and materials international (SEMI)’s July report, which forecasted that global sales of total semiconductor manufacturing equipment by original equipment manufacturers (OEMs) will bounce back to close to US$100 billion (RM464.2 billion) in 2024 from a projected contraction to US$87.4 billion in 2023, following an industry record of US$107.4 billion in 2022.

“The recovery will be driven by both the front-end and back-end segments, with growing focus on electrification for sustainability, shifting to cloud-based services and the increased demand for AI solutions,” the report read.

Shares of SAM Engineering closed down 12 sen or 2.42% to RM4.83, giving the group a market capitalisation of RM2.62 billion.

The stock has recovered 26.77% from this year's low of RM3.81 on May 19.