Nanofilm tumbles after flagging first-half loss of about $8m on lower revenue
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Nanofilm said it expects a 34 per cent fall in revenue to $73 million for the first half-year.
PHOTO: NANOFILM TECHNOLOGIES
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SINGAPORE – Shares of Nanofilm Technologies fell sharply on Tuesday after the company warned of a net loss of approximately $8 million for the first six months ended June 30 due to a fall in revenue.
Nanofilm, which specialises in advanced materials and coatings, said in a regulatory filing on Monday that it is expecting to post a 34 per cent fall in revenue to $73 million for the first half-year.
Nevertheless, the group will continue to recognise positive earnings before interest, taxes, depreciation and amortisation for the period.
Its shares tumbled when trading opened on Tuesday and closed down 21 cents, or 15.7 per cent, at $1.13.
Nanofilm attributed the weaker performance to several market-related factors. Ongoing macroeconomic challenges, such as persistent inflationary pressures, high interest rates and geopolitical tensions, have led to reduced consumer discretionary spending that has impacted demand, said the company.
A softer-than-anticipated reopening recovery in China in the first half has also affected demand. Additionally, weaker demand across the broader consumer electronics sector has significantly impacted the group’s advanced material business unit, particularly its computer, communication and consumer segment, as well as its nanofabrication business unit.
Meanwhile, the group’s industrial equipment business unit has been impacted as a result of a reduction in capital expenditure by customers due to more cautious market sentiment.
Nanofilm was also affected by increased operating expenses connected to the group’s investments in long-term business initiatives to drive future growth, including costs related to new facility set-ups in Zigong and Huizhou in China, ongoing business-building expenses related to Sydrogen, and higher depreciation expenses associated with capital investments in new production facilities.
To mitigate these challenges, the company has implemented cost-reduction measures in manpower, overheads and other operating expenses.
“Nanofilm remains fully focused on delivering its long-term growth through the execution of its market expansion strategy,” it said.
It added that it will focus on the three end-markets of consumers, industrial and new energy, and will be driven through multiple business models such as equipment sale, coating as a service, component production and value-chain integration.
Despite the weak performance in the first half, Nanofilm expects revenue for the second half of financial year 2023 to be higher than for the first half of the year, and to be profitable for the full year. This outlook assumes that current macroeconomic challenges do not worsen.
Given the current challenging environment, Nanofilm noted that it will be deferring its 2025 target of attaining $500 million in revenue and $100 million in profit after tax and minority interest to “a later time when there is better visibility”.
Further details of the group’s financial performance will be disclosed in the company’s first-half results, which will be released on Aug 10. THE BUSINESS TIMES
