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Largan fails to reach expectations

Largan Precision Co (大立光電), the nation's leading maker of camera lenses, yesterday posted a quarterly gross margin which failed to match up with analysts' high predictions.

The company's gross margin was NT$1 billion (US$30 million), or 59.8 percent, for the final quarter last year, slightly behind the market prediction of above 60 percent.

price drop

This prompted its share prices to drop by NT$16, or 2.47 percent, to close at NT$633 on the Taiwan Stock Exchange yesterday.

"As orders poured in, we were short of manpower to fully concentrate on improving our products' yield rates, which affected the performance of gross margin," company chairman Lin Yao-yin (林耀英) told investors yesterday.

"What we can guarantee is that the gross margin for this first quarter will be maintained above 50 percent," he said.

This is achievable as Largan is bringing in new equipment to facilitate smoother production, as well as dedicating more manpower to beef up the yield rate as a whole, he added.

Largan's net income hit NT$1.7 billion for the whole of last year, up from NT$1.1 billion a year ago. Its gross margin climbed from NT$1.4 billion to NT$2.2 billion.

Its consolidated sales, meanwhile, rose to NT$4 billion from NT$2.7 billion in the previous year, according to its latest statistics.

The Taichung-based company -- which supplies optical lenses for camera phones, digital cameras and multifunctional printers -- saw handset lenses forming the majority (74 percent) of all sales in the fourth quarter.

lenses

Digital-camera lenses accounted for some 13 percent and projector lenses were 10 percent, its data indicated.

According to Lin, of around 1 billion handsets estimated to be shipped worldwide this year, nearly half of them will come with a camera.

Riding on the robust camera-phone growth, the company said that the first three quarters of this year will look good.

"While the fourth quarter outlook is still uncertain, we can say that the prospects for the other three are good," Lin said.

Lin, however, remained tight-lipped as usual and refused to reveal any specific target figures for this year.

Largan also expected the shipment proportion of lower-resolution VGA lenses will be higher than megapixel lenses, as global demand for the VGA-based third-generation and cheaper camera phones is still strong.

"We expect that most of our shipment volumes for the first six months will come from VGA lenses, while 1.3 megapixel lenses will start to pick up in the second half," Lin added.
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