CML Microsystems, a UK chipmaker, reports an 18% rise in sales despite challenges.
- The demand for semiconductors remains weak, signalling potential market issues.
- Building delays in the US affect CML’s planned efficiency improvements.
- The firm maintains a strategic stance on potential tariff impacts from Europe.
- CML intends to sell surplus property to offset financial pressures.
CML Microsystems, a prominent chipmaker based in Essex, has reported an 18% increase in sales, reaching £12.5 million for the six months ending in September. Despite this positive financial performance, the company is facing notable challenges, particularly in demand for semiconductors, which remains subdued. This indicates broader market conditions that may impact future growth prospects for the firm.
The company has also encountered delays in its efforts to upgrade US facilities, which were expected to enhance operational efficiencies and reduce costs. CML attributes these setbacks to difficulties in obtaining local government building permits, resulting in elevated costs that are anticipated to extend into the later part of the financial year. This situation underscores the complexities of navigating regulatory landscapes for expansion initiatives.
Nevertheless, CML remains strategically prepared to handle potential tariffs that could arise following political shifts in Europe. According to managing director Chris Gurry, the company is confident in its ability to adapt its operations swiftly. “We believe we’re going to be okay but if we needed to be fleet of foot and rearrange things slightly, I think we’re well-positioned to do that for a business of our size,” he stated. This adaptive strategy highlights CML’s proactive approach to international trade complexities.
In addition to addressing these operational challenges, CML is actively working to improve its financial standing by selling off surplus land and property that do not align with its operational necessities. This includes excess land at its headquarters in Essex for which planning permission has been secured, potentially providing a profitable return compared to the initial purchase price.
The financial markets have responded to these announcements with an 8% drop in CML’s share price, reflecting investor concerns over the challenges mentioned. Additionally, the company’s pre-tax profits have decreased from £1.9 million to £0.8 million over the same period, further emphasizing the financial pressures it currently faces. However, CML has maintained its dividend, indicating a level of confidence in future stability.
CML Microsystems is navigating a landscape of growth and operational challenges with a focus on flexibility and strategic property sales.
