Largan Precision Co (大立光), the nation's leading manufacturer of camera lenses, saw a dip in profitability in the second quarter after a drop in shipments to major customers.
The company posted a net income of NT$359 million (US$10.9 million), or NT$2.86 per share, in the quarter ending June, a drop of 55 percent from NT$794.6 million, or NT$6.93 per share, in the corresponding period last year.
Margins dropped to 53.93 percent, from 61.2 percent last year and 57.42 percent in the first three months.
The company's consolidated sales were NT$1.26 billion, a drop of 26 percent from last year and 4.8 percent from the first quarter.
"Sales in the third quarter will see single-digit growth from the second quarter, as we have orders coming in for the next month and a half," company president Chen Hsi-ching (陳世卿) told investors yesterday.
The company's handset camera lenses, which contributed 82 percent to total sales in the first half of the year, are seeing shipments equally split between lower-resolution VGA lenses and 1-megapixel lenses, he said.
Shipments of 2-megapixel lenses are gaining momentum, but those for 3 megapixels and above will depend on market demand next year, he said.
"We are trying to enlarge our client base to avoid being too focused on major customers," Chen said.
The company is also expecting gradual growth driven by lenses deployed in notebooks and automobiles -- two new segments it diversified into last year.
"The second quarter was the hardest for Largan, as its major customer Motorola faced a tough time. But Largan's business performance should rebound in the current quarter thanks to strong handset shipments in the traditionally busy period," E. Sun Securities (
Moreover, the Taiwanese manufacturer will get a boost from shipments for Apple Inc's iPhones, it said.
The popularity of iPhones is expected to boost demand for mid-range and high-end handsets, which would in turn benefit Largan in terms of higher-resolution camera lenses offering better margins.
This year, Largan's shipments of 2-megapixel lenses could account for 24 percent of its total handset-lens shipments, up from last year's 16 percent, while 3-megapixel lenses could rise 2 percent, E. Sun Securities predicted.
Largan's shares closed down 0.5 percent to NT$308.5 on the Taiwan Stock Exchange yesterday.