PETALING JAYA: Ongoing trade tensions and semiconductor sanctions between the US and China are driving significant shifts in the geographic production strategies for customers of KESM Industries Bhd
(KESM).
As such, the group said it is working closely with its customers to remain agile, continuously adjusting its production plans to meet both challenges and opportunities.
Releasing its results for the final quarter (4Q24) ended July 31, 2024, KESM posted a net loss of RM977,000 for the quarter from a net profit of RM316,000 a year ago; but recorded net earnings of RM188,000 for the year, bouncing back from a loss of RM3.1mil seen in FY23.
Revenue for 4Q24 was 8% lower year-on-year (y-o-y) at RM56.5mil, which KESM said was largely due to lower sales generated from processing automotive chips.
It said consumables increased 14% y-o-y or RM600,000, to support varying product mix, while depreciation of property, plant and equipment was higher by 13% or RM1.3mil, as additional machinery and test equipment were commissioned for use in the production.
“Finance costs increased by 42% largely due to higher interest rates, although other expenses decreased by 3%, mainly attributable to lower utility and repair and maintenance costs. This is partially offset by net foreign exchange loss of RM600,000,” it said.
Meanwhile, turnover in FY24 was higher by 6% y-o-y to RM243mil, which KESM said was primarily due to higher demand for its services.
While the year saw an increase of property, plant and equipment depreciation of 21%, followed by an increase in finance costs and other expenses, higher interest income and other income of 65% and 46% respectively y-o-y had contributed to the group returning to the black.
KESM proposed an interim dividend of 7.5 sen per share for the year, which was approved on Sept 19 and to be paid out on Oct 29, which also represented a 25% increase from the 6 sen declared last year.
Separately, the group said China’s push for semiconductor self-sufficiency is set also to disrupt supply chains, while in recent months, the transition to electric vehicles has ignited potential tariff wars amongst major world economies that may dampen a recovering automotive market in the near term.
“The demand for chips in artificial intelligence/data centres is projected by some research houses to grow exponentially.
“However, the growth trajectory may be tapered by the speed of the supply chain’s certification and its end market acceptance,” it said.
