Memtech Q1 2010 profit up US$1mln

Robust sales and enhanced operational efficiencies brought in company profit from losing territory.

Mainboard-listed Memtech International Ltd. (Memtech or the Group), a leading integrated component solutions provider for the mobile phone, IT equipment and automotive industries, today reported a record first quarter revenue of US$30.8 million for the three months ended March 31, 2010 (Q1 2010), up 52.8% compared to US$20.2 million for the three months ended March 31, 2009 (Q1 2009), according to Memtech's report released on Wednesday.

On the back of higher sales and improved operational efficiencies, the Group recorded a net profit attributable to shareholders of US$1.0 million in Q1 2010 compared to a net loss of US$0.7 million in Q1 2009.

Executive Chairman of Memtech International Ltd., Mr Chuang Wen Fu said, "Memtech is off to a strong start in 2010, turning in our best first quarter sales in the Group’s history. Our strong revenue performance was a result of growing orders from existing and new customers, driven by the upturn in the keypad business. The Group’s bottomline was further boosted by enhanced operational efficiencies and a leaner cost structure."

Led by stronger sales and improvements in manufacturing efficiencies, the Group’s gross profit doubled to US$5.6 million in Q1 2010. Gross profit margin also improved from 13.8% in Q1 2009 to 18.1% in Q1 2010.

During the quarter under review, sales and marketing expenses increased by 40.9% from US$1.1 million to US$1.6 million. The higher level of sales and marketing expenses was a result of increases in salaries and related expenses, together with higher packaging cost due to increased sales.

General and administration expenses rose 38.8% to US$2.6 million in Q1 2010. This was mainly due to increased salaries and related expenses and a provision for doubtful debts of US$0.2 million in Q1 2010 compared to a reversal of US$0.1 million in the previous corresponding period.

As at March 31, 2010, the Group continued to maintain a strong financial position, with cash and cash equivalents of US$40.3 million or approximately 5.6 US cents per share.

Based on the macroeconomic outlook and orders from existing and new customers, the Group expects a healthy growth in its keypad business in 2010.

While the Group expects to continue to see intense competition and price pressure in its plastics business, Memtech will step up its efforts to improve its plastics business. On the other hand, the Group is positive of the prospects of its small, but growing touch screen panel business.

“Our touch screen panel products are well received by its customers despite our business being at its infancy stage. We are therefore optimistic that this business segment will achieve significant growth by the end of 2010, ” added Mr Chuang.