SEMICONDUCTOR player Frencken Group : E28 +1.62% on Friday (May 19) reported a net profit of S$5.2 million for the first fiscal quarter of FY2023 ended March, down 59.5 per cent from S$12.8 million in the corresponding year-ago quarter.

 

The company noted that the business environment for companies in the technology sector remained challenging in Q1 amid a &ldquo steep cyclical downturn&rdquo in the semiconductor industry, as well as ongoing global geopolitical and economic uncertainties. 

 

Revenue for the quarter fell 13 per cent year on year to S$172.5 million. Revenue contribution from Frencken&rsquo s mechatronics division declined as more robust sales from its Europe operations were offset by sharply lower sales of the industrial automation and semiconductor businesses at its Asia operations.

 

The group&rsquo s integrated manufacturing services (IMS) division also booked lower revenue in Q1 on the back of lower sales of the automotive and consumer and industrial segments. 

 

The decline in revenue, coupled with continuing inflationary cost pressures and higher depreciation expenses due to the group&rsquo s capital investments to upgrade and expand its global manufacturing facilities, also crimped the group&rsquo s gross profit margin to 12.3 per cent in Q1 from 15.4 per cent in the year-ago period. 

 

Looking ahead, Frencken said it expects the business environment to remain challenging this year. 

 

However, the company said it is confident of weathering the current headwinds particularly due to its &ldquo diverse exposure to multiple market segments in the high technology industry&rdquo and the strength of its balance sheet. 

 

It added that it will continue to focus on investments in programmes for existing and new customers. 

 

Given the challenging operating conditions, Frencken said it maintains &ldquo a cautious view&rdquo for FY2023. 

 

Based on current indicators and barring unforeseen circumstances, the group expects its revenue in H1 this year to soften compared to the same period last year. 

 

Segmentally, the group is expecting revenue contributions from its semiconductor and industrial automation segments to weaken in H1, while the medical and automotive segments are expected to book &ldquo stable revenue&rdquo . 

 

The analytical and life sciences segment, meanwhile, is expected to see revenue increase, the company said.