For the 2HFY2020 ended December, Frencken Group saw 5.2% higher earnings of $23.8 million from earnings of $22.7 million posted the year before.
This brings full-year earnings to $42.6 million, 0.5% higher than FY2019 earnings of $42.4 million.
Frencken Group’s revenue fell 5.8% y-o-y to $620.6 million for the full year FY2020 ended December, owing to lower sales contributions from both the Mechatronics and IMS Divisions.
That said, revenue increased 12.2% h-o-h to $328.1 million in 2HFY2020 from $292.5 million in 1HFY2020 on the back of a gradual recovery in business conditions.
As a result of lower revenue, the group’s gross profit decreased 5.4% y-o-y to $105.4 million in FY2020. Gross profit margin (GPM) improved marginally to 17.0% in FY2020 compared to 16.9% in FY2019.
After accounting for income tax of $8.8 million, the Group’s net profit attributable to equity holders (PATMI) remains stable with $42.6 million in FY2020 compared to S$42.4 million in FY2019.
The board is recommending a first and final dividend of 3.0 cents per share in respect of FY2020, unchanged from FY2019. Since listing on the Singapore Exchange (SGX) in 2005, the group has paid dividends representing at least 30% of its earnings every year.
On a fully diluted basis, earnings per share (EPS) stands at 9.98 cents for the 12 months ended Dec 31, 2020, up from 9.97 the year before.
See: RHB maintains 'buy' on Frencken, says impairment loss 'does not impact positive outlook'
By segments, revenue at the Mechatronics Division softened 3.5% y-o-y to $520.5 million in FY2020 from $539.6 million in FY2019. Lower sales of the industrial automation and analytical segments were largely offset by higher sales of the semiconductor segment.
The semiconductor segment’s sales grew 60.7% y-o-y to $186.3 million in FY2020. The Group recorded higher orders for both front-end and back-end semiconductor equipment from customers in Europe and Asia.
Sales of the medical segment softened 2.1% y-o-y to $85.1 million in FY2020, attributable mainly to slower order flows from a key customer in Europe during 2HFY2020. The analytical segment’s sales declined 12.9% y-o-y to $115.8 million in FY2020 due primarily to lower demand from customers in Europe.
Sales of the industrial automation segment fell 36.2% y-o-y to S$118.9 million in FY2020 due to lower shipments of storage drive production equipment to a key multinational customer. Sales of this segment are typically lumpy in nature and dependent on the capital expenditure requirements of key customers, notes the company.
Revenue at the integrated manufacturing services (IMS) Division decreased 16.6% y-o-y to $100.9 million in FY2020 attributable primarily to a 17.8% reduction in the automotive segment’s sales to $77.0 million. The automotive segment experienced a significant sales decrease during 1H2020 as orders from customers in the Group’s main automotive markets were affected by government restrictions and an overall slowdown in end-user demand.
Other income, net of other operating expenses, increased to $6.2 million in FY2020 from $3.3 million in FY2019. This was due mainly to grants from the job support scheme of the Singapore government and grants from various other governments to alleviate the impact of Covid-19 outbreak, as well as an investment incentive subsidy for the Group’s plant in Chuzhou, China.
Cost of sales fell 5.9% y-o-y to $515.17 million. Selling and distribution expenses decreased 19.1% y-o-y to $9.6 million in FY2020 due primarily to lower travelling expenses and reduction in premium freight charges at the IMS Division.
Meanwhile, finance costs decreased 17.0% y-o-y to $2.4 million in FY2020 due to lower interest expenses.
Total assets increased to $563.8 million as at Dec 31, 2020, from $506.2 million in the previous year; while total borrowings increased to $67.3 million as at Dec 31, 2020, from $53.2 million in the previous year.
The group’s cash and cash equivalents increased to $174.5 million from $122.4 million as at Dec 31, 2020.
The group recorded a net increase in cash and cash equivalents of $41.9 million during FY2020. When added to its opening cash and cash equivalents of $109.6 million at the beginning of FY2020 and after accounting for the negative effect of foreign currency movements of $0.4 million on its opening cash and cash equivalents, the group had a cash balance of $151.1 million as at Dec 31, 2020.
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“Looking ahead, the uncertainties surrounding the Covid-19 trajectory continue to weigh on the outlook of the global economy. A resurgence of new Covid-19 infections and variants may pose challenges to the recovery in global business conditions,” says the company.
“Based on current indicators, and barring any unforeseen circumstances and further deterioration in the business environment arising from the pandemic, the Group anticipates its revenue in 1HFY2021 will increase h-o-h as compared to 2HFY2020, driven by higher expected sales from the majority of its key business segments.”
Shares in Frencken closed 2 cents higher, or 1.61% up, at $1.26 on Feb 25.
