FRONTKEN CORPORATION BERHAD 200401012517 (651020-T) ANNUAL REPORT 2025 13 CHAIRMAN’S MESSAGE (CONT’D) Operational improvements remain a priority. Following the acquisition of a new facility that will house its Plant 3, AGTC will be relocating its flat panel display cleaning operations from Plant 1 to Plant 3, freeing up capacity in Plant 1 to further expand its semiconductor cleaning capacity. The relocation is expected to enhance workflow efficiency and improve utilisation across facilities. New cleaning lines were also installed in Plant 2 to support a specialised tool platform with qualification and production ramp-up expected to happen around the second and third quarters of 2026. In parallel, AGTC is evaluating opportunities to acquire additional land to accommodate longer-term growth. With expanded capacity and enhanced operational capabilities, AGTC is well positioned to support customers’ technology migration and production growth and continue to provide cleaning solutions and specialised surface treatment that are critical to equipment reliability and process stability in advanced manufacturing. Frontken (Singapore) Pte Ltd (Semiconductor) The Singapore semiconductor division recorded marginally lower revenue in FY2025 primarily due to reduced volume from some of its customers. That said, the operating environment is expected to improve gradually through 2026 supported by a broader recovery in semiconductor end-markets and ongoing industry advancements. With our customers expected to expand and increase their production capacities including the setting up of new plants, we believe that the demand for our services in the coming years will increase substantially. During the year, facility upgrades were undertaken to meet the requirements of a new customer. These enhancements position this division to support the process requirements and incremental service volumes as the customer progresses through R&D and production ramp-up phases. This is expected to provide a potential new revenue stream as soon as the second half of 2026 and increasing in the coming years. Attracting and retaining skilled technical personnel remains a key challenge. We continue to address this through proactive workforce planning and retention initiatives alongside ongoing productivity improvements. Greater emphasis will be placed on broadening our customer base, deepening technical competencies and maintaining margin discipline. Looking ahead, performance is expected to improve in the coming year, supported by recovering demand, contributions from the new customer and continued operational enhancements. Frontken Malaysia - Semiconductor (“FMSB”) FMSB operates precision cleaning facilities in Kulim, Kuching and Melaka, serving as an integral part of the wafer fabrication equipment component cleaning ecosystem within Malaysia’s semiconductor industry. Its performance improved in FY2025, driven by higher volumes from wafer fabrication customers and equipment manufacturers supported by better capacity utilisation and ongoing operational enhancements. This division also continued to support wide bandgap semiconductor production. During the year, capital investment focused on selective equipment upgrades to enhance operational stability and production efficiency while workflow optimisation and process consistency were strengthened across facilities. The competition for skilled labour remained an industrywide challenge and was managed through proactive retention initiatives and ongoing efforts to improve productivity at every level of the operation. Malaysia's semiconductor industry is well positioned for continued growth supported by sustained demand from advanced electronics, emerging technologies and the broader digitalisation of key industries. Ongoing fab expansions and production ramp-ups across the country are expected to translate into increased cleaning and refurbishment requirements, providing a favourable demand environment for FMSB's services. Pricing adjustments secured during the year are expected to support performance in the coming year while the division’s continued focus on operational discipline and close customer engagement provides a strong foundation for sustained performance going forward. Engineering The engineering segment delivered a satisfactory performance despite a softer operating environment. Deep technical expertise built over decades across the oil and gas, energy and general industries provided the segment with solid foundation, cushioning the impact of reduced project activity. According to the International Energy Agency (“IEA”), global upstream oil and gas investment is expected to reach approximately US$570 billion in 2025, reflecting sustained spending to maintain production and existing field infrastructure. This level of industry activity continues to underpin demand for our specialised maintenance, repair and engineering services. Amid market fluctuations and cost pressures, the segment maintained strict operational discipline, pursuing productivity improvements and cost management measures that enabled it to remain profitable while preserving long-standing customer relationships.
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