Nanofilm H2 profit falls 56.9%; full-year earnings down 92.8% after first-half loss

SINGAPORE – Mainboard-listed Nanofilm Technologies, which specialises in advanced materials and coatings, posted a net profit of $10.8 million for the second half ended Dec 31, down 56.9 per cent from the $25 million made in the year-earlier period.

Despite posting a first-half loss, the group made a full-year profit of $3.1 million, although this was down 92.8 per cent from the $43.8 million earnings posted in the previous financial year.

In its bourse filing on Feb 26, the company attributed the recovery in second-half business performance from the first half to its cost optimisation efforts and a rebound in revenue, which rose 42 per cent to $103.9 million from just $73.2 million in the first half.

However, compared with the year-ago period, second-half revenue was still down 17.6 per cent.

Full-year revenue came in 25.4 per cent lower, at $177 million.

The drop in operating costs was achieved through the 8.7 per cent fall in the group’s second-half administrative expenses to $21.9 million, and the 19.4 per cent fall in the same half’s research and development and engineering expenses to $9.4 million.

The group attributed the drop in R&D and engineering expenses to an increase in the “capitalisation” of eligible activities, describing them as “moving closer to commercialisation”.

With this, Nanofilm highlighted in a statement that the business has remained profitable with a positive operating cash flow, with $39 million in net cash generated from financial year 2023’s operating activities, despite the “tough environment” that it was operating in.

Earnings per share came in at 1.65 cents, from earnings per share of 3.8 cents a year earlier.

“Combining revenue drivers and cost optimisation, the group expects FY2024 financial performance to achieve higher revenues and profits, contingent upon absence of major unexpected events,” it added.

The group derives its revenue from four business segments, three of which reported a drop in takings of between 16 per cent and 40.5 per cent in the 2023 financial year.

Notably, revenue for its biggest segment – the advanced materials business unit – fell 24.4 per cent to $141.5 million, from $187.2 million in the 2022 financial year, on lower revenue contributions from consumer electronics, communication and computers (3C) products.

The drop in revenue from the 3C sub-segment was partially offset by a rise in revenue from its automotive product sub-segment, the group noted.

Meanwhile, the group’s finance costs grew by 55.6 per cent to $1.9 million in financial year 2023.

As at Dec 31, the group’s cash and cash equivalents amounted to $155.2 million, up 5 per cent from $147.8 million a year ago.

The group has proposed a final dividend of 0.33 cent per share to be paid on May 20, if shareholders approve it at the company’s upcoming annual general meeting on April 26.

Shares of Nanofilm closed at 82 cents, up 8.5 cents or 11.6 per cent, on Feb 27.

THE BUSINESS TIMES