CML Microsystems: High-spend customers not enough to prevent profit dip

CML said that Microwave Technology Inc, which it acquired in October 2023, had contributed revenue "above management expectations"

Semiconductor designer CML Microsystems has seen its revenue jump after it quadrupled the number of high-spend customers on its books.

The London-listed firm, which develops mixed-signal, radio frequency and microwave semiconductors from its headquarters in Maldon, grew its revenue by 11 per cent to £22.89m in the year ended March 31, 2024, up from £20.64m in the 12 months before.

Essex-based CML said that Microwave Technology Inc, which it acquired in October 2023, had contributed revenue “above management expectations”, with other acquisitions made over the past four years helping to expand its product range.

As a result the chip maker said that it had increased its high-spend customers from three for 12 since the year ended March 31, 2020.

But despite increasing its revenue CML saw its pre-tax profit drop by almost £1m to £2.5m from £3.2m in the year before, with bosses blaming “macro headwinds” for the dip.

Chris Gurry, group managing director of CML, said: “Continuing macro headwinds and over-stocked inventory levels within some customers subdued profitability for the year.

“The contribution to date from MwT has exceeded our expectations and confirms our belief that the skills and product range acquired complement our existing capability and provides us with a complete, global offering.

“The mega trends behind the markets we serve point to an ever-growing opportunity and our highly engineered, mission critical products and the strength of our relationships positions the Group well to capitalise.

“Although the mixed demand environment is expected to continue in the current financial year, the strength of our balance sheet and deep customer relationships enables us to confidently invest, delivering the optimal return for all stakeholders in both the medium and long term.”

CML recommended a final dividend of 6.0p per share giving a full year dividend of 11.0p – a figure which remains unchanged from its previous financial year.