TECHNOLOGY firm Aztech Systems yesterday reported a 79.2 per cent rise in earnings for the three months ended March 31, to $3.8 million from $2.1 million in the previous corresponding period.

Gross profit margin rose to 19.1 per cent from 16.8 per cent. Aztech said that the rise in profit was due mainly to improved operation efficiency and sales of higher margin products.

The rise in earnings came on the back of a 20.5 per cent growth in revenue, to $55.8 million.

Revenue growth was driven mainly by Aztech's OEM (original equipment manufacturing) and ODM (original design manufacturing) businesses, which grew 44 per cent to $28.3 million due to strong demand for data and voice communication devices.

Aztech's contract manufacturing segment also grew 28 per cent to $22.6 million in the first quarter, thanks to stronger demand from existing customers.

However, retail sales slipped 46 per cent to $4.9 million due to price erosion and market competition.

Earnings per share were 0.93 cents, up from 0.53 cents in the first quarter of 2006. Aztech's cash position also remained healthy, with total cash and cash equivalents of $34.5 million at the end of the first quarter, up from $29.2 million as at Dec 31 2006.

Aztech said it would introduce new products with better margins, and increase its distribution channels in South-east Asia, the Middle East, and Hong Kong. As part of its diversification efforts, Aztech recently created a youth electronic business division, focusing on remote control hobbyist products.

The first product, Helex Remote Control Helicopters, has already been introduced. Aztech is working on additions to this product line.

'With these encouraging 1Q2007 results, we are optimistic to achieve good performance for this year,' said Aztech's chairman and CEO Michael Mun.

Aztech said its performance reflected its strategy of focusing on higher margin ODM and OEM products, and its ability to leverage on outsourcing trends to grow its contract manufacturing segment.

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