HONG KONG -- Japan's March 11 earthquake continues to claim victims as SMT Holdings tries to stave off bankruptcy. The Top 50 EMS firm is closing two factories and cutting its workforce by one-third as orders from its major Japanese customers have dried up.

The electronics manufacturing company depends on Japan for more than half its revenue, not to mention much of its parts sourcing. It took a net loss for its third straight year, triggering a spot on the Singapore Stock Exchange watch list.

For the year, the EMS firm took a loss of HK$759.8 million, down from a loss of HK$53.2 million the previous year. The company continues to see revenues slide, with sales down 36% year-over-year in the June quarter.

The firm also took an impairment loss of HK$539.2 million for the year ended March 31 due to reassessments of the value of its property, plant and equipment.

As part of its restructuring, SMT Holdings yesterday said it is in the process of finalizing the execution of a so-called standstill agreement with its major lenders, and has entered into exclusive negotiations with a potential but as-yet undisclosed investor. By the end of June, the contract assembler had exited a number of low-margin businesses and changed its sales mix from turnkey to more consigned component assembly. It has closed its Changchun, China, factory and will shutter its Suzhou site by the end of September. It also has cut its workforce 32% to 4,900 employees.

SMT Holdings plants to reduce its management levels and more focus on higher-tech contents and higher profit margins in the consumer, security, LED lighting, and medical and health care segments.

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