UMS Integration (558) H2 2023 earnings summary

Executive summary

• Q4FY2023 revenue fell 27% YoY to S$73.5m, while attributable profit eased 3% to S$15.7m; revenue rose ~3% QoQ as Aerospace and Others rebounded.

• FY2023 revenue declined 19% to S$299.9m and attributable profit fell 39% to S$60.0m; Aerospace growth and positive cash flow partly cushioned semiconductor weakness.

Financial highlights

• Q4 profit before tax fell 9% YoY to S$17.3m; net profit was S$15.8m, down 2%, and attributable profit was S$15.7m, down 3%.

• FY2023 profit before tax declined 34% to S$68.5m; net profit fell 40% to S$61.2m and attributable profit fell 39% to S$60.0m.

• Gross material margin rose to 52.8% in Q4 from 46.5% YoY, partly reflecting an integrated-system contract renewal and inventory-provision reversals; FY margin increased to 50.1% from 49.9%.

• FY expense pressures included depreciation up 15%, other expenses up 13%, machinery upkeep up 16% and utilities up 38%; Malaysian ICPT implementation contributed to higher utilities.

• FY2022 included a one-off reversal of a Malaysian subsidiary tax-penalty provision, affecting the year-on-year tax comparison; FY2023 tax expense was S$7.3m versus S$1.2m.

Outlook and guidance

• Volume production at the new Penang facility for a new customer is scheduled to start in March 2024, with order flow expected to uptick in coming months.

• Positive customer guidance, semiconductor-sector recovery expectations and sustained aviation demand support confidence; continued investment across key business segments is planned.

• FY2024 is expected to remain profitable, barring unforeseen circumstances.