Weighed by the semiconductor down cycle, ISDN Holdings has reported lower earnings of $4.95 million for FY2023, down 66.1% over the preceding 12 months ended Dec 2022. Revenue in the same period was down 7.8% y-o-y to $341.8 million.
For FY2023, the company's gross margin dropped by 1.9 points, but ISDN expects to recover sequentially along with the industry upcycle.
Besides its industrial automation businesses, ISDN runs hydropower plants in Indonesia, which have reached commercialisation after years.
In FY2023, this business segment generated 2% of the company's revenue and contributed tariff income of some $8.8 million.
Meanwhile, ISDN's industrial automation business remains its core.
Its China industrial automation business, which generated 73% of revenue, grew 6.6% y-o-y on a constant-currency basis, but given the weaker RMB versus Singdollar, the reporting currency, was up just 2.4%.
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According to ISDN, it gained market share as the overall market in China dipped by 2% in FY2023.
As for its Southeast Asia industrial automation business, which contributed 21% of revenue, it suffered a drop of 28.3%, as the bulk of the demand was concentrated within the semiconductor industry which suffered from widespread cyclical decline in this region.
Tellingly, ISDN has not lost any of its semiconductor customers and believes it has not lost any significant market share in Southeast Asia.
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As such, it believes the industrial automation business in this region should recover alongside the broader industrial and manufacturing sector.
For the more recent 2HFY2023, the company is seeing sequential improvement over 1HFY2023, and the momentum is persisting into this year and it is well poised to capture long-term and cyclical growth.
“Despite tremendous cyclical headwinds in 2023, ISDN managed to grow revenue and market share in its most important core market, China," says managing director Teo Cher Koon.
"ISDN has used the downturn to position itself more strongly than ever to be relevant to the automation needs of Asia’s growing economies, and we hope to capitalise well on the coming cyclical recovery in semiconductors and electronics," he adds.
ISDN shares closed Feb 28 at 33 cents, down 2.94% for the day and down 34% in the past 12 months.
