SINGAPORE (Apr 25): AEM Holdings posted earnings of $8.2 million for the quarter ended Mar, doubling from its 1Q17 earnings of $4.1 million a year ago on higher revenue, mainly comprising contributions from its core business in equipment systems (ESS).
Revenue for the quarter grew 55.9% to $65.7 million from $42.1 million previously due to significantly higher revenue from ESS on increased equipment, pans and kit sales, which grew 58.5% to $63.8 million a year ago.
Meanwhile, revenue from the group’s precision components (PCS) business remained stable at $1.9 million over the quarter.
Raw materials and consumables costs, AEM’s major cost component, grew 30.1% to $47.1 million from $36.2 million in 1Q17.
The group’s management highlights that the growth in this cost component was of a lower proportion compared to the latest quarter’s revenue increase due to cost reduction initiatives and better cost efficiency, which in turn played a significant part in lifting overall profit margins.
Staff costs over the quarter grew by 78% to $8.3 million from $4.7 million on the back of higher salary costs for additional headcount to handle the increased sales orders from customers, enhancement, sustaining and development projects, business development and higher incentives provisions.
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In all, net profit margin for the quarter improved to 12.5% from 9.8% a year ago due to the higher sales, product margin and improvement in cost efficiency.
Loke Wai San, AEM’s executive chairman, says he expects orders for test handlers from the group’s major customer to remain positive, and the business to remain cash-generative as per its guidance for FY18.
Adding that AEM has added significantly to its engineering talent pool over the last 12 months, Loke says the group will continue to seek acquisitions that can enhance its technical capabilities and financial performance.
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“As AEM’s handlers get installed and become a larger proportion of our customer’s fleet, we do expect seasonality to enter our business with Q2 and Q3 representing typical peak quarters. The initial ramp phase will transition to a more operational replacement phase of our customer’s older fleet over many years. We do also expect the sustaining elements of our business, field services and consumables, to start to grow in late FY 2018,” says Loke.
As at 9.53am, shares in AEM are down by 7 cents at $6.53.
