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NT dollar hurts net income at Largan

Largan Precision Co (大立光), the nation’s leading maker of camera lenses, saw net income drop 16 percent to NT$583.75 million (US$19.27 million) last quarter from the same period the previous year as a result of the appreciation of the New Taiwan dollar.

The company’s gross margin fell to 53.67 percent last quarter, from 57.42 percent a year ago, company statistics showed.

“Largan lost up to NT$160 million last quarter because of the appreciation of the NT dollar against the greenback, which is the primary reason for our decline in gross margin,” Charles Chiu (邱東泉), spokesman and chief financial officer at Largan, said at an investor conference yesterday.

Every NT$1 appreciation against the US dollar will have a 1.5 percent impact on the company’s gross margin, Chiu said.

“If we remove the foreign currency exchange effect, Largan’s gross margin in the first quarter would have been more than 57 percent,” Gary Wang (王董騏), a research department supervisor at Mega Securities Co (兆豐證券), said yesterday.

Largan said its product mix would remain unchanged in the first half of this year, with video-graphics-array (VGA) lenses and non-VGA lenses accounting for 40 percent and 60 percent respectively.

The company is facing increasing pressure as stiffening market competition has caused prices to decline, while lens shipments for handsets also saw an 8 percent quarter-on-quarter decline in the first quarter.

“The decline in prices is a problem faced by the entire lens industry. But the question is: Who can survive the longest?” Largan chairman Scott Lin (林耀英) said yesterday.

Largan said 2-megapixel phone lenses would be its main sale item this year.

For the 3-megapixel models, which accounted for 7 percent of worldwide handset shipments last year, Largan said their ratio of product mix would grow, but was unlikely to reach 15 percent by the end of next year.


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