Sunningdale posts S$8.25m H1 net profit; lowers interim dividend to 1.8 cents

PRECISION manufacturer Sunningdale posted a S$8.25 million net profit for the six months ended June, reversing a S$292,000 loss from a year ago with some help from Covid-19-related government grants.

The mainboard-listed company declared an interim dividend of 1.8 Singapore cents per share, down from 3 cents per share a year ago. The dividend will be paid on Sept 11.

Sunningdale recorded a 14.7 per cent fall in revenue to S$275.1 million, due to the slowdown across global automotive markets and mandatory government closures of its manufacturing facilities amid Covid-19.

Contributions from the automotive segment declined 29.4 per cent to S$84.2 million, given the facilities' closure and a slowdown across the US and Europe amid Covid-19.

Meanwhile, revenue in the consumer and IT segment fell 12 per cent to S$105.6 million, due to its decision to exit the lower-margin business of a specific customer in February. The segment was also hit by shutdowns of some manufacturing facilities in China, Malaysia and Singapore. This was cushioned by strong orders from three customers.

Healthcare emerged as a bright spot. Revenue from Sunningdale's smaller healthcare business grew 17.9 per cent to S$34.5 million, driven by the increase in orders secured amid Covid-19 and new projects launched.

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Sunnningdale's overall bottomline was lifted by S$6.69 million in other income, which includes S$3.3 million in government grants related to Covid-19 and a S$700,000 net foreign-exchange gain. Operating cash flows strengthened to S$45.7 million for H1, up from S$11.9 million a year ago. 

Sunningdale's gross profit margin also expanded 2 percentage points to 12.2 per cent, on the back of the relocation of its parts operations from Shanghai to Chuzhou, as well as a change in product mix, tightened cost controls, improved operational efficiency, governments' stimulus grants and the waiver of foreign worker levies.

Chief executive Khoo Boo Hor said: "Our immediate attitude for the second half is one of caution and heightened vigilance as we are unable to predict if shutdowns will recur, nor are we able to quantify the economic impact on the end demand of our customers."

Acknowledging the lower dividend payout, he added: "The board felt that it is prudent to conserve cash in this highly uncertain environment. Furthermore, this period of crisis may throw up opportunities for mergers and acquisitions to grow the group."

Shares of Sunningdale closed flat at S$1.20 on Thursday, before the results announcement.