Economic slowdown pulls Cirtek profits down 70%
The global economic slowdown and unique industry challenges have negatively affected demand for electronic and communications devices
Cirtek Holdings Philippines Corp. registered 70 percent lower net income after tax in the first six months of the year, to $2.3 million from $7.53 million in the same period last year, on the back of a global slowdown in economic growth and other industry challenges.
The listed technology firm said consolidated revenues likewise dropped 11 percent to $48.6 million from $54.85 million in the period ending June.
Gross margin declined to 22 percent, lower from last year’s 28 percent.
“The global economic slowdown and unique industry challenges have negatively affected demand for electronic and communications devices. As a result, revenue and profitability for the first half of the year have been lower than expected,” Cirtek president Jorge Aguilar said.
“Despite the challenges, we will continue to aggressively pursue new customers and new markets, continue strategic collaboration with third parties for quicker time to market and broader product offerings to major customers, and continue to driver efficiency across the organization,” he added.
Aguilar said the business is poised to double its portfolio within a year as its unit Quintel, which it acquired in 2017, rolls out new-generation wireless base station antennas.
Additionally, Cirtek is expecting annual revenues worth $3 million after its subsidiary, Cirtek Electronics Corp., bagged a deal with a United States firm for the supply of products to be used for 5G wireless systems.
Earlier this year, Cirtek also bared plans to increase by 6 million its production of military-grade power regulators and microelectromechanical systems products due to high demand.
It is also aiming to expand its production capacity of power regulators to two million units annually.
A report by J.P. Morgan and IHS Markit indicated that the manufacturing production and new orders intake declined globally to its lowest level since October 2012 to 49.3 percent in July, a notch lower than the 49.4 percent reported in June.
Nineteen of the 20 economies tallied for the research indicated downturns in their manufacturing sector. The report attributed the decline to the “deteriorating trend in international trade flows weighing particularly heavily on performance.”