Fri, Apr 24, 2009 - Page 11 News List

Largan’s first-quarter profit plunges amid slow sales

SLoW OUTLOOK The company’s chief financial officer did not provide sales guidance for the coming quarters, saying that order visibility was low at only one month

By Kevin Chen  /  STAFF REPORTER

Camera lens maker Largan Precision Co (大立光) saw its profits decline for a second quarter in the three months ending on March 31 amid slowing sales owing to the global recession.

First-quarter profit was nearly halved to NT$444 million (US$13 million), or NT$3.41 per share, from NT$803 million, or NT$6.15 per share, in the fourth quarter of last year, Largan said in a filing with the Taiwan Stock Exchange yesterday.

On an annual basis, profits in the first three months dropped 24.5 percent from NT$583 million in the same quarter last year.

The company posted a profit of NT$1.13 billion in the third quarter and NT$722 million in the second quarter of last year, the stock exchange filing and the company’s financial tallies showed.

Largan shares dipped 1.3 percent to NT$260 yesterday, underperforming the benchmark TAIEX, which slid 0.18 percent. The stock has risen 27.8 percent in the year to date, on a par with the TAIEX’s 28 percent rise.

Largan’s falling profit came in the face of weakening sales. Consolidated revenue dropped 30.1 percent sequentially to NT$1.2 billion in the first quarter and 29.8 percent from the same period last year, the Taichung-based company said.

Charles Chiu (邱東泉), Largan’s chief financial officer and spokesman, told a teleconference yesterday that the company’s gross margin dropped to 43.22 percent in the first quarter, from 51.68 percent in the fourth quarter, the first time its quarterly gross margin had fallen below 50 percent in three years.

Chiu attributed shrinking gross margins to falling average selling prices and slowing sales, which offset the positive impact from growing shipments of high-value 3-megapixel phone lenses.

Chiu did not provide a sales guidance for the coming quarters, saying order visibility was low at only one month. But he said that second-quarter revenue would likely be higher than the first quarter.

“First-quarter results likely marked a bottom for Largan’s 2009 earnings,” Citigroup Global Markets analyst Kevin Chang (張凱偉) wrote in a client note yesterday.

“However, with low earnings visibility and high threat of new competition, we maintain our Sell rating as further re-rating is unlikely,” Chang said.

Largan is scheduled to hold a board meeting next week to discuss its dividend plan.

In its stock exchange filing, the company said profits last year reached NT$3.24 billion, or NT$24.92 per share, on revenue of NT$7.48 billion. That compares with profits of NT$2.57 billion and revenues of NT$4.16 billion in 2007.

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