KUALA LUMPUR (Sept 21): KESM Industries Bhd registered an annual net loss of RM3.13 million for the financial year ended July 31, 2023 (FY2023) compared to a net profit of RM1.67 million in the previous year, dragged by rising costs and a downturn in the semiconductor industry this year.

The independent burn-in and test service company said annual revenue declined by 7% to RM228.28 million from RM246.74 million previously, largely due to the absence of revenue from electronic manufacturing services (EMS) which was scaled down, and reduced volumes for burn-in and testing services.

The lower revenue, coupled with higher finance and utility costs, resulted in KESM’s first annual loss since its listing in 1994, Bloomberg data showed.

KESM group CEO and executive chairman Samuel Lim said FY2023 was a challenging year as its revenues were weakened by a reduction in EMS activities and continued Covid-19 restrictions in China, which were finally lifted in early 2023.

“We boldly pushed forward with our RM143 million strategic investment plan in cutting-edge test equipment, now firmly in place, positioning us for expansion with confidence.

“We remain steadfast in our optimism and commitment to seize the growing opportunities within the automotive semiconductor industry.

“With our customer-centric approach, we are well-positioned to forge new partnerships with leading automotive semiconductor manufacturers,” he said.

It has also substantially installed its newly invested production equipment and machinery, and is generally on track to uplift production capacity for automotive devices.

For the final quarter ended July 31, 2023 (4QFY2023), the group returned to the black by posting a net profit of RM316,000 from a net loss of RM2.50 million reported in the same period last year (4QFY2022), KESM said in its filing.

Quarterly revenue, on the other hand, came in higher by 11% to RM61.69 million from RM55.66 million, fuelled by higher burn-in and testing sales generated from newly invested capital expenditure.

KESM added the worldwide semiconductor industry is expected to contract by 12.3% to US$525.9 billion (RM2.4 trillion) this year and rebound by 20.4% in 2024, with revenue seen reaching US$633 billion.

Shares in KESM Industries closed five sen or 0.70% lower to RM7.05, valuing the group at RM303.25 million.