Simplo Technology Co (新普科技), the world’s largest maker of notebook battery packs, said yesterday that profits would slow in the current quarter as double-digit growth in shipments fails to offset the impact of lower prices.
The company told an investor conference that third-quarter net income would be about NT$867 million (US$27 million) to NT$884 million, down from NT$992 million in the second quarter.
It also forecast a revenue of NT$10 billion to NT$10.2 billion in the July-to-September period, inching up from NT$9.8 billion in the previous three months. Gross margin is forecast to slide to 14 percent from 14.8 percent, the company said.
“This is quite abnormal, considering the third quarter is usually busier than the second,” Simplo chairman and CEO Raymond Sung (宋福祥) said.
The company, which is a major supplier of Apple Inc’s iPad tablets, said it would continue to see a surge in shipments from last month to next month with high sequential double-digit growth, but lower prices would hurt profits.
Simplo forecast earnings per share in the current quarter to be between NT$3.4 and NT$3.47, compared with NT$3.89 in the second quarter and NT$2.37 in the first. The launch of the iPad in late March has spurred consumers into buying tablet PCs from the second quarter onward.
The iPad craze is expected to go on into the second half, with a number of other PC rivals already placing orders with Simplo for battery packs for their iPad-like products, Sung said.
He said Simplo is able to win over these clients with its technological advantage in polymer lithium ion batteries. Polymer lithium ion batteries will be the common standard for tablet devices instead of lithium ion batteries because they are smaller and give users a longer usage time, he added.
Sung brushed off analysts’ concerns by saying the merger of smaller rivals — DynaPack International Technology Corp (順達) and Celxpert Energy Corp (加百裕工業) — would not hurt its leadership in the industry.
DynaPack and Celxpert, Taiwan’s second and third-largest notebook battery pack makers respectively, announced last Friday they would merge through a stock swap of one Dynapack share for 1.7 Celxpert shares, with Dynapack to be the surviving entity. The deal will cost Dynapack NT$5.8 billion.
To avert possible risks, clients will still allocate orders to various battery pack makers on a quota basis, so the merger of two firms doesn’t mean they will win more orders, Sung said, adding that the merger would be difficult because of the companies’ differing corporate cultures.
To avoid over-dependence on the notebook sector, Simplo is aggressively diversifying into batteries for automobiles, such as hybrid or electric vehicles, expecting related sales to hit NT$1 billion next year, Sung said.
The company is eyeing automakers in Shanghai for a possible partnership and is expecting shipment volumes to significantly grow in 2013.
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