Published July 29, 2009

STATS ChipPAC's Q2 net dives 90%

By WINSTON CHAI

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STATS ChipPAC yesterday reported a near 90 per cent year-on-year drop in second-quarter net profit to US$2.2 million. But business conditions are now on the mend, it says.

For the corresponding second quarter last year, the group - which is majority owned by Singapore investment company Temasek Holdings - raked in a net profit of US$22.1 million before the onset of the US-led downturn crimped demand for electronics and computer products.

STATS ChipPAC's revenue for the April-June quarter slid to US$320.7 million, down 26.1 per cent from US$434.1 million in 2008. Q2 earnings per share was flat, compared with one US cent a year earlier. On a sequential basis, Q2's revenue increased 45.4 per cent from the first quarter.

'Our second quarter revenue reflected improved business conditions as we benefited from the rebound in demand for our services from the restocking of inventories by our customers and the launch of new products,' said Tan Lay Koon, president and chief executive of STATS ChipPAC.

The US continues to be the group's revenue lynchpin, accounting for 76.2 per cent of Q2 sales. Asia contributed 19.9 per cent while Europe accounted for the remaining 3.9 per cent.

For the first half of 2009, STATS ChipPAC registered a net loss of US$48.8 million (which included restructuring charges), reversing from a US$40 million net profit for the previous first half. Net revenues for the first six months dived 37.2 per cent to US$541.2 million.

The company ended the second quarter with cash, cash equivalents and marketable securities of US$325.4 million while debt stood at US$467.2 million.

STATS ChipPAC has slashed its worldwide headcount by 2,200 from December 2008 to March this year in an attempt to reduce operating costs to cope with the drastic downturn.

The company was also planning to return some US$813 million to shareholders through a capital reduction exercise but the move was scrapped earlier this year as it could not obtain debt financing amid the credit crunch.

STATS ChipPAC's shares rose one cent to close at 74 cents yesterday.