CML Microsystems has reported a rise in sales amid concerns over declining semiconductor demand and construction setbacks.
- The Essex-based company experienced difficulties with obtaining permits for upgrades in the US, resulting in higher costs.
- Despite a sales increase, pre-tax profits have declined significantly, reflecting potential economic challenges.
- The company is considering selling surplus land to optimise operational efficiency and expects a favourable return.
- CML remains optimistic about its position with facilities in multiple regions, ready to adapt to new trade dynamics.
CML Microsystems, a British chipmaker known for its mixed-signal, RF, and microwave semiconductors, has announced an increase in sales by 18% to £12.5m for the six months ending September. However, the company faces hurdles as it warns of a ‘subdued’ demand for semiconductors along with delays in its construction projects in the US. These delays are primarily due to difficulties in obtaining necessary local building permits, which have led to elevated costs that are expected to extend into the second half of the financial year.
The firm’s struggles with permit approvals for US facility upgrades have not dampened its confidence. CML maintains optimism by strategically planning to adjust its operations should tariffs arise from European exports to the US. Chris Gurry, managing director, expressed readiness to rearrange production origination if needed, leveraging their testing facilities across Asia, the US, and the UK.
Despite the positive sales growth, CML’s pre-tax profits have taken a downturn from £1.9m to £0.8m over the reported period. The company has decided to maintain its previous dividend of 5p. It continues to face short-term industry challenges but remains committed to expanding into sectors such as microwave, millimetre wave, and broadcast radio, indicating a robust strategic positioning for future recovery.
In a bid to streamline its operations, CML plans to sell off surplus land, including properties at its Essex Headquarters, Oval Park, for which planning permission has been secured. This strategic divestiture is anticipated to bring significant returns when compared to the acquisition cost, contributing positively to the company’s financial health.
Moreover, CML’s shares have experienced a drop of 8% to 234p, declining by approximately one-third since the start of the year. Nevertheless, the company continues to hold a positive outlook on its operational performance and market adaptability in the face of evolving global economic conditions.
CML Microsystems remains resilient in navigating current industry challenges while strategically positioning itself for future growth.
