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CML Microsystems results hit by raw material supply issues, shares tumble

Published: 11:54 20 Nov 2018 GMT

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CML Micro's order intake now comes from a wider customer base, which is helping mitigate the impact of supply difficulties

CML Microsystems PLC (LON:CML) reported a slight rise in first-half profit despite disruptions from rising raw material lead times and unpredictable customer purchasing patterns, which dented its shares.

The maker of radio frequency semiconductors for the industrial storage and communications markets on Tuesday reported a 2% rise in pretax profit to £2.36mln in the six months to the end of September on 6% higher revenues at £15.05mln.

READ: CML Microsystems says full-year profit will exceed market forecasts after robust second half

CML said it continued to be impacted by the combined effects of extended raw material lead times and NAND flash market dynamics along with uncertainty around customer purchasing patterns created by ongoing trade issues between China and the USA.

The company said its order intake now comes from a wider customer base, which is helping mitigate the impact of supply difficulties. The company added that it had increased its purchasing of raw materials to address supply chain constraints it was experiencing,

"With a growing number of customer products reaching production, the board is confident that meaningful advances will be made as end market dynamics normalise and remains excited about the group's future prospects,” CML’s managing director Chris Gurry said in a statement.

“It currently looks challenging for second half revenues to show material improvement over the first six months although at the profit before tax level, the impact is expected to be less pronounced due to the anticipated product mix. Therefore, a full year advance in profitability remains likely, in-line with market expectations,” he added.

CML Microsystems shares were 8.7% down at 421.0p in early afternoon trade.

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