KUALA LUMPUR (March 25): UWC Bhd's net profit fell 75% year-on-year for its second quarter ended Jan 31, 2024 (2QFY2024) as the semiconductor market cyclical downturn weighed on revenue, coupled with higher expenditure for investment to cater for future growth.

Its net profit fell to RM4.81 million or 0.44 sen per share for 2QFY2024 from RM19.1 million or 1.73 sen per share a year ago, according to the Penang-based integrated engineering solutions provider’s stock exchange filing on Monday.

Quarterly revenue declined 33.5% to RM61.13 million from RM91.92 million in 2QFY2023.

“The global economic landscape is marked by volatility and the group was not immune to the effects of it. Accordingly, the uncertainties had caused shifts in consumer behaviour that led to softening demand for electronic products and technological devices, which affected the semiconductor industry performance,” UWC told Bursa Malaysia.

The group is capable of providing high-end engineering and manufacturing services — including precision sheet metal fabrication and value-added assembly services — to industries such as semiconductor, life science and medical technology, as well as telecommunications. It is essentially a one-stop solutions centre providing modules for full turnkey assembly manufacturing automated test equipment (ATE).

For the cumulative six-month period, UWC's net profit fell 81% to RM9.16 million from RM48.35 million in the previous corresponding period, while revenue declined 42% to RM106.68 million from RM184.04 million.

UWC said it maintains an optimistic outlook towards both its business and the industries in which it operates in for the coming years amid signs of recovery.

The group, it said, continues to focus on commencing new projects, onboarding new customers and strategizing long-term growth plans to optimize potential business opportunities.

“The group has ventured into the front-end semiconductor engineering related businesses by securing several modules from the industry while working on other potential project transfers in coming years.

“Albeit facing near term challenges of weaker market demand for consumer devices that affects semiconductor consumption, the group expects a gradual recovery in the year 2024, particularly in the improvement of system level and performance testers,” it added.

On top of that, UWC said it is working to secure qualification for several modules from the front-end semiconductor industry.

The group said it also undertakes production capacity expansion to cater for its existing core business as well as new front-end semiconductor engineering businesses and electric vehicle (EV) projects.

“The group has ventured into businesses for 5G network equipment, autonomous vehicle-related chip testers and EV battery testers. The group recently commenced mass production for one of its EV battery tester models and expect two more in the pipeline to materialize during the second half of 2024,” it said.

Shares of UWC closed seven sen or 2.1% lower at RM3.20 on Monday, giving it a market capitalisation of RM3.53 billion.