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Frencken Group Posted A 20% Increase In Profit In First Quarter

frenFrencken Group (SGX: E28) is made up of two main businesses; the mechatronics business and the and the Integrated Manufacturing Services (IMS) business. The mechantronics business, using the Frencken Brand, serves the medical, semiconductor, analytical and industrial automation segments. It provides manufacturing services for the high precision products of its customers through an Original Equipment Manufacturers (OEM) arrangement. Its customers included multi-national companies such as Philips, Siemens, Intel and Seagate.

Its IMS business provides contract design and manufacturing services to mainly the automotive and office automation industries. Its main customers include BMW, DENSO and Brother Industries. The company announced its first quarter result on 8th May 2014.

Operating Result

The company recorded a 3.4% growth in revenue year on year to S$ 110.9million. This is mainly due to the increase in automotive business from the IMS segment. The IMS segment currently contributes about 39% of the total revenue, up from 37.3% last year.

The mechatronics segment enjoyed huge growth coming from its semiconductor customers but suffered slowing demand from customers from all other sectors. Overall, Frencken saw an increase in its gross profit margin to 15.6% due to the mechatronics segment. Net profit attributable to shareholders improved 20% to S$ 3.8million.

The company increases its net debt by S$ 2million to S$33.6million and has a net debt-to-equity of 16.1%. The company ended the quarter with a net asset value of 52 cents per share.

Most of the company’s debts are current liabilities, meaning that they are used mainly as working capital. This is means that its debts are mainly used to maintain the business rather than funding activities which might be riskier. The company ended trading on 8th May 2014 at S$ 0.36.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.