KUALA LUMPUR (Sept 21): Burn-in and test service provider KESM Industries Bhd saw its net profit fall 15.6% to RM11.32 million in the fourth financial quarter ended July 31, 2018 (4QFY18) from RM13.4 million a year ago, mainly due to lower demand for burn-in, testing and electronic manufacturing services.

This resulted in lower earnings per share of 26.3 sen for 4QFY18 compared with 31.2 sen for 4QFY17.

Quarterly revenue also came in 5% lower at RM85.27 million from RM89.77 million in 4QFY17.

Nevertheless, the group proposed a final dividend of 6 sen per share amounting to RM2.6 million for FY18, to be approved by shareholders at the next annual general meeting on Jan 10, 2019.

For the full FY18, the group's net profit declined 10.6% to RM39.34 million from RM43.99 million in the previous year, on higher taxes and supply issues.

However, revenue improved by a marginal 3.5% to RM349.78 million from RM337.99 million in FY17 on higher demand for burn-in and testing services.

"Our results were affected by a crunch in the supply of materials and poor yields of new devices experienced by our customers. This temporary delay hindered our expansion progress," said KESM executive chairman and chief executive officer Sam Lim in a statement today.

"Hence, we made a decision to hold back some of our investments, which gave us a surplus to pay higher dividends to our shareholders," he added.

In a separate filing with Bursa Malaysia today, KESM said worldwide semiconductor revenue is estimated to reach US$451 billion in 2018, representing a growth of 7.3% from US$420.4 billion in 2017.

However, it warned that the escalation of trade wars between major economies and uncertainties inflicted on cross-border mergers and acquisitions seen in the semiconductor industry may disrupt these positive outlooks.

"These risks may impact the steady flow of material supplies for our burn-in and test services.

"Nonetheless, the group is relentlessly streamlining its operations to better position itself for business volatility," it added.

KESM shares closed unchanged at RM17.1 today, for a market capitalisation of RM735.55 million.