Fri, Aug 19, 2011 - Page 12 News List

Largan’s first-half earnings rose 35%

CAUTION:While the lens maker expressed confidence about second-half prospects, an HSBC report said competition from other Taiwanese and Chinese producers was rising

By Jason Tan  /  Staff Reporter

Taiwan’s largest handset lens- maker, Largan Precision Co (大立光), yesterday reported that first-half profits totaled NT$2.29 billion (US$79 million), up 35 percent from the same period last year, as robust global shipments of smartphones boosted orders from customers.

Earnings per share in the first six months of the year reached NT$17.09, up from last year’s NT$12.65, said Largan, which counts HTC Corp (宏達電), Apple Inc and Motorola Inc among its customers.

Net sales during the period expanded 52 percent to NT$7.58 billion, compared with NT$4.99 billion in the same period last year. However, gross margin slid to 43.95 percent from 47.81 percent a year earlier.

For the current quarter, the company said that revenues would grow from NT$4.07 billion in the second quarter, but refused to provide a growth figure.

Contributions from 8-megapixel (MP) lenses, which are priced higher than lower-resolution 2MP and 3MP lenses, expanded and accounted for more than 10 percent of overall sales late in the second quarter.

Chief executive officer Adam Lin (林恩平) told an investor teleconference the company would continue to benefit from new orders that are mostly for 8MP lenses.

As for 10MP lenses, the company said there were still technical problems with the sensor solutions and mass production would likely have to wait until 2013, Lin said.

He added that production is currently running at “full” capacity, with additional capacity ramping up until the end of next year to take in more orders, Lin said.

Analysts raised concern during a teleconference that Largan’s profit margins could be affected by the entry of more low and mid-end smartphones into the market.

Lin cited its Chinese customers as an example, saying that although some were launching lower-priced smartphones, they would not compromise on picture quality by using lower-resolution lenses.

Handset lenses accounted for 96 percent of Largan’s first-half sales, while digital camera lenses and multifunctional printer lenses contributed 3 percent and 1 percent respectively, company data showed.

With many lens-makers ramping up capacity, HSBC Global Research said Largan faces intensified competition going into next year.

A China-based lens-maker started shipping 2MP lenses to Nokia Oyj in April and is in the process of being qualified as a supplier for 5MP lenses, HSBC said in a report yesterday.

A Taiwanese lens-maker has also been qualified by Apple and its production yield for 8MP lenses is close to Largan’s, it added.

Shares of Largan closed up 2.96 percent at NT$834 on the Taiwan Stock Exchange yesterday.

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