Singapore Exchange Mainboard (SGX)-listed Innotek Limited announced that its revenue decreased by 5.9 percent (S$58.3 million to S$54.8 million) in the second quarter of financial year 2014 (Q2'14).
In its media statement, the precision metal components manufacturer said that while sales from Precision sub-assembly and Tooling segments declined, revenue from the Precision Component segment rose as a result of higher demand for automotive products.
According to the company, the Precision sub-assembly segment was impacted by an early end-of-life of a major TV product in Q4'13 from a major Japanese customer; whereas the Tooling segment revenue was affected mainly by intense competition from local companies with lower cost structures.
In addition, gross profit margin for InnoTek's wholly-owned Mansfield Manufacturing Company Ltd (MSF) decreased from 13.6 percent to 8.4 percent in Q2'14 as compared to the same quarter last year. This was mainly due to start-up costs incurred by the Precision sub-assembly segment in preparation for mass production of initial orders in Q2'14 secured from non-Japanese OEM TV manufacturer, and also retrenchment expenses from the Tooling segment.
Besides that, the gross profit margin was also affected by compensation paid to a senior management staff who left the company in Q2'14, offset by a gain of S$0.2 million following the company's decision to diversify into various investment instruments instead of solely in SGX-listed Sabana Reits. As a result, the company recorded a net loss after tax of S$3.9 million in Q2'14 compared to breakeven in Q2'13.
"Our efforts to reduce our dependency on the Japanese customers are starting to pay off as we take on new non-Japanese contracts. We will also deepen our penetration in the automotive components sector which continues to show healthy growth," said Peter Tan Boon Heng, Executive Director of InnoTek.
"The Group remains resolute in our efforts to improve product quality and achieve better cost efficiencies. We have strengthened our management team and hope to streamline operations through centralisation of certain functions to facilitate better integration and collaboration across our facilities," he added.
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