Feb 27, 2003
Elec & Eltek International Co. Ltd. ("EEIC") today released its unaudited half-yearly results of the group and of the company for the six months ended December 31, 2002, together with the comparative figures for the six months ended December 31, 2001.
Net revenue of the Elec & Eltek Group for the six months ended Dec. 31, 2002, was S$206.7 million, showing an 8.8% decrease from the previous corresponding period and down 2.5% from the second half of the group's last financial year.
Comparing the current financial period with both first half and second half of the last financial year, the Group said its pre-tax operating profit declined by approximately 19.2%. Pre-tax profit fell from S$25.3 million to S$20.5 million. The results included a S$0.6-million redundancy payment for the continuing rationalization of the group's operations in Hong Kong and China.
The group's earning per share based on the weighted average of 145,992,245 ordinary shares in issue amounted to 11.66 Singapore cents per share, as compared with 15.67 Singapore cents over the previous corresponding period. Diluted EPS, taking into account the effects of outstanding share options, was 11.65 Singapore cents. Net assets value per share was S$2.67 per share, said Elec & Eltek.
At the company level, the investment income of S$15.0 million comprised tax-exempted dividends received from various subsidiaries in China.
Business review
Elec & Eltek said that an upsurge of business in March and April 2002 "proved to be transient and unsustainable." Starting from May 2002, OEMs, ODMs, and EMS providers reduced their PCB requirements as finished-goods inventory remained excessive, Elec & Eltek said.
These conditions resulted in what E&E termed "a slow start" for the current financial year, with plant utilization rate averaging between 60-65% in the first quarter.
The PCB business started to improve gradually from October onward as a result of continuous outsourcing of PCB requirements from higher-cost regions into China and from aggressive relocation of design and manufacturing bases into China by OEMs, ODMs, and EMS companies, said Elec & Eltek.
E & E said that it maintains the largest PCB manufacturing capacities in China, thus positioning the group as a "clear beneficiary of this industry trend."
The group saw an improved utilization rate in Q2, at about 80-85%, it said. Another positive influence on utilization was late-seasonal buying that pushedup orders from October onward, E & E said.
In the current financial period, average selling prices for PCBs declined by about 6.2% from the second half of the last financial year, with easing pressure on selling prices toward the end of Q2, said Elec & Eltek.
Compared to the previous corresponding period, the group grew by around 9% in the 2-layer and 4-layer PCB businesses, making gains in the automotive, consumer, and computer sectors but recording fewer orders for 6-layer and 8-layer boards "due to depressed business conditions in the communications sector."
E & E also said the Group made gains in the 10-layer and above business, with a growth of about 5% over the second half of the last financial year, largely from newly-developed higher-end computer products and backplane business.
Elec & Eltek's PCB shipments to Asia for the current financial period totaled S$142.1 million or 69% of total turnover, compared with S$130.2 million or 57% and S$129.9 million or 61% of total turnover for the first and second half of last financial year, respectively.
Looking ahead
In view of "emerging business opportunities," the group restarted two plants that had been temporarily suspended. KaiPing I plant reopened in October 2002 and Guangzhou IV plant resumed operations in December 2002, E & E said.
The group reported that it is seeing new business orders translating into a capacity utilization of about 78-83% at the beginning of the second half of the current financial year, even after the end of seasonal demand.
Barring unforeseen circumstances, Elec & Eltek said today, its directors believe the worst is behind the group and. The group said it expects a better second-half result.
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