UMS released their first quarter 2013 results with a poorer profit and margin. Dividend of 1 cent maintained. We first talk about UMS Holdings as a cyclical stock (read here). In the last quarter, results was lukewarm and further examination shows that gross material margins have fallen from 54% to 41% on a discount to major customer Applied Materials (AMAT)

Gross Material Margins

You can read the full results here. Orders from foundries have improved in January to March so much so that  gross material margins were restored to 48%. Still gross material margins fell compared to 2012 of 52%.

Overall, UMS’ gross material margin decrease from 52% in 1Q2012 to 48% in 1Q2013, mainly due to product mix. Integrated system segment experienced a lower margin due to price discounts extended to the Group’s major customer. Furthermore, more subcontracting works resulting from labor shortage in Singapore had also affected ...

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