Compal Electronics Inc (仁寶電腦), the world’s second-largest contract notebook maker, yesterday posted a 50.8 percent decline in profit year-on-year for the second quarter on foreign exchange losses and weaker demand amid global economic uncertainty.
Net profit totaled NT$3.17 billion (US$109.24 million), or NT$0.75 per share, in the April-to-June period, compared with NT$6.45 billion, or NT$1.49 per share, the previous year, company data showed.
“This has been a tough year for us,” chief financial officer Gary Lu (呂清雄) told an investors’ conference. “The NT dollar’s rise against the US dollar, as well as the debt crisis in the US and the eurozone, have had a negative impact on revenues and profits in the first half of the year.”
Gross margin was 4.9 percent in the second quarter, compared with 5.2 percent the previous year, because of increased competition, the company said.
Compal president Ray Chen (陳瑞聰) revised the company’s full-year notebook shipments forecast down to 42 million units, from the 48 million units estimated in April, citing the impact of tablet devices on the market for notebooks.
It was the second time this year the company had cut its full-year guidance on notebook shipments. In January, the firm estimated it would ship 55 million notebooks this year.
Chen expects third-quarter revenues to remain flat quarter-on-quarter, with revenue in the fourth quarter maintaining the level seen in the third quarter.
“We do not see strong market demand for notebooks in the second half of the year, based on orders received this month,” he said.
However, even though the market will remain flat next year, Chen said notebook shipments may surge by 20 percent, indicating that company’s restructuring strategy may start benefiting it next year.
In addition, the continuing consolidation in the original design manufacturer sector may slow price-cutting pressures and make the industry healthier with a more reasonable pricing strategy, he said.
The company plans to expand the scale of its research and development (R&D) by recruiting 650 new engineers in the second half of the year. R&D currently employs 350 people.
“We hope the investment in R&D will increase the value of our products, helping us maintain a higher gross margin,” Chen said.
Chen also cut the company’s forecast for full-year shipments of TVs to 6.5 million units from the 8 million estimated previously, on weakening sentiment in the industry this year, but he said the company would maintain the pace of its product diversification staying focused on TVs and other non-notebook businesses, such as tablets and handset devices.
“We expect the non-notebook business to account for 25 percent of the company’s revenues by the end of next year,” Chen said.
The non-notebook business had brought in 17 percent of the firm’s total revenues as at the end of the second quarter.
Revenue totaled NT$176.37 billion, down 22.33 percent from a year earlier, but 3.09 percent higher than the previous quarter, company data showed.
In the first six months, net income totaled NT$6.58 billion, or NT$1.55 per share, compared with NT$15.02 billion, or NT$3.46 per share, the previous year, company data showed.
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