Sam Engineering braces for reduced demand

PETALING JAYA: Sam Engineering & Equipment (M) Bhd says it expects reduced demand from planemakers this year and has started redeploying excess resources from its aerospace division to its growing equipment business.

“With airlines deferring and, in some cases, cancelling new aircraft deliveries, airframers have reduced their aircraft production rates by at least one-third this year.

“We began to see demand reductions as Aerospace customers reduce or push out demands,” the company said in a filing with Bursa Malaysia yesterday.

The decreased demand of casing products for Boeing 737max and casing and aerostructure products for Airbus 320neo contributed to the company’s lower profit in the fourth quarter ended March 31.

Net profit fell to Rm14.92mil in the quarter ended March 31 compared with the Rm22.44mil made a year earlier.

Revenue, however, jumped to Rm253.6mil compared with Rm195.8mil previously.

The higher revenue was driven by its equipment business, with strong orders from customers in the data storage and semiconductor industry.

“While the long-term outlook for the aerospace industry remains positive due to the fundamental drivers of air travel demand, there is uncertainty with respect to when commercial air traffic levels will begin to recover, and whether and at what point capacity will return to and/or exceed pre-covid-19 levels,” it said.

“On the other hand, the outlook for our equipment business remains strong, as we are supporting the essential products segment.”

Over the last two months, Sam Engineering said the group’s equipment division has been ramping up production capacity to recover from previous mandated facility closures and support customers’ increase in demand.