Elek & Eltek suffers slump in Q1 earnings on slower orders

Elek & Eltek International Co posted a 71 per cent drop in first quarter net earnings to US$1.2 million (S$1.5 million).

Revenue for the three months to March 31 was flat at US$115.7 million.

The group's performance was impacted by slower orders from customers in the first two months of the year, in line with normal seasonality.

The labour supply was tight around the Chinese Lunar New Year period as migrant workers went back to their home town for the holidays.

With lower shipment volume against a higher overhead absorption at the plants, gross profit declined by 34.6 per cent to US$8.7 million.

Computer related business accounted for only about 23 per cent of total printed circuit board (PCB) compared to 30 per cent in the same period last year.

Communication & networking products (including mobile phones) accounted for over 43 per cent of sales while automotive PCB sales also increased substantially by over 26 per cent in value to account for around 18 per cent of total PCB sales.

Sales of high density interconnect PCBs continued to show robust growth momentum and accounted for some 29 per cent of total PCB sales.

Earnings per share fell to 0.62 US cent from 2.14 US cents previously while net asset value per share grew to US$1.92 compared to US$1.91 as at Dec 31.

Looking ahead, Elek said business momentum have improved after the holiday period as customers started to gear up their production for the second quarter.

"Hence, all our manufacturing sites experienced improved capacity utilisation since March with our workers returning to work after the Chinese Lunar New Year."

Order from telecommunication and automotive customers continued to show growth.

With higher plant capacity utilisation since March and the operation efficiency of Yangzhou plant showing positive progress, Elek's performance is expected to improve in the second quarter.