Nanofilm sees 40% fall in Q1 revenue due to cyclical reasons, slow China reopening

SINGAPORE – Mainboard-listed Nanofilm Technologies, which specialises in advanced materials and coatings, posted a 40 per cent fall in revenue to $33 million for its first quarter ended March 31.

The first-quarter period is typically cyclical in line with production cycles, while revenue was also hit by China’s slow and soft recovery

since its reopening,

the company said in a business update on Wednesday.

Nanofilm said that its advanced materials business unit – which contributed around 75 per cent of its year-to-date revenue – saw relatively softer end-consumer demand as the market took time to adjust and recover after China’s reopening.

In the first quarter of this year, the segment was also weaker in comparison with the same period in 2022, which saw strong results due to peak production carried forward from the fourth quarter of 2021, the company added.

The nanofabrication business unit – which contributed around 6 per cent of the group’s year-to-date revenue – also saw relatively softer end-consumer demand, which impacted the mass production schedule of its key projects.

The industrial equipment business unit – which accounted for around 19 per cent of the group’s year-to-date revenue – mainly executed on last year’s backlog orders, which was a softer year as customers were cautious and cut back on capital expenditure.

Meanwhile, its Sydrogen joint venture segment – which made up less than 1 per cent of the group’s year-to-date revenue – was able to maintain a high growth rate from its low base.

Nanofilm expects the macro environment to remain challenging, although it notes that the second half of the financial year will likely look brighter. It expects customer activity to ramp up in the second half, while post-China recovery should also present opportunities.

Shares of Nanofilm closed down 15 cents, or 9.1 per cent, at $1.50 on Thursday.

THE BUSINESS TIMES