KUALA LUMPUR (March 8): KESM Industries Bhd slipped into the red with a net loss of RM1.01 million for the second quarter ended Jan 31, 2022 (2QFY22) against a net profit of RM6.33 million posted a year ago, due to lower other income.

Revenue also fell 5.38% to RM64.3 million, from RM67.96 million a year ago, KESM said in a bourse filing.

The group did not declare any dividend for the latest quarter.

For the half year ended Jan 31, 2022, net profit decreased by 8.27% to RM6.51 million from RM7.1 million a year earlier, while revenue grew 2.96% to RM132.88 million from RM129.07 million.

The group said its plant in Tianjin stopped production temporarily as directed by the local authorities, in response to Covid-19 cases in mid January 2022.

It attributed lower revenue in 2QFY22 to reduced sales for electronic manufacturing services (EMS).

It said there was a gain on disposal of machinery and test equipment of RM3.1 million, and net fair value gain on investment securities of RM2.8 million in the previous year’s corresponding quarter.

In a separate statement, KESM executive chairman and chief executive officer Sam Lim said the momentum of its stellar performance in the first quarter was disrupted by the coronavirus pandemic, as reflected in its second quarter results.

“We responded expeditiously to safeguard employees’ health and took several measures to address delivery lags,” he said, noting component deliveries in the supply chain remain tight and prices continue to escalate.

“The group is taking strategic steps in scaling down its EMS and re-sizing its workforce to give greater focus to its burn-in and testing sales activities,” said Lim, adding that signs are pointing to strong growth in semiconductors.

“Demands for chips are growing in a number of markets such as artificial intelligence, communication, medical, etc. Making chips reliable is essential and KESM is setting aside RM100 million investments for capital spending in calendar year 2022,” he said.

KESM closed 25 sen or 2.67% lower to RM9.10 on Tuesday (March 8), valuing the group at RM430.14 million.

Year to date, the counter has fallen 26.61%.