Largan Precision Co (大立光), Taiwan’s leading maker of handset lenses, yesterday voiced pessimism about its prospects for the fourth quarter because revenue at the company has been weaker this month than last month.
The downturn in sentiment came after the Greater Taichung-based company, whose customers include Apple Inc, Research in Motion Ltd and HTC Corp (宏達電), reported a 59.07 percent jump in net income from the second to the third quarter of NT$1.75 billion (US$57.6 million).
“As a components supplier, we cannot be upbeat without actually having new orders,” Largan Precision chief executive officer Adam Lin (林恩平) told an investors’ conference yesterday afternoon.
Currently, the firm has just one months’ worth of orders because some customers have presented rosy forecasts, while others have made cuts, Lin said.
“We have not seen any orders for November or December yet,” Lin said. “Poor visibility makes it difficult to provide sales guidance. If the global economy deteriorates further, sales are bound to be affected.”
Largan’s third-quarter net income of NT$1.75 billion, or earnings per share of NT$13.01, was a record high on strong demand for smartphones that make up 97 percent of the firm’s sales, a company report showed.
Net profits totaled NT$4.04 billion in the first nine months of the year, rising 38 percent from the same period last year and translating into earnings per share of NT$30.1, the report said.
Lin expects 8-megapixel phone lenses to be the mainstream product in coming months and next year after sales outpaced that of the 5-megapixel lenses last quarter, although demand for all products showed signs of a slowdown.
As a result, the firm’s utilization rate dropped this month from last month, Lin said, without giving numbers.
Largan did not spot a drop in average selling prices, but acknowledged gross margin pressure which the company’s chief financial officer Charles Chiu (邱東泉) said has more to do with shrinking shipments than other factors.
The company reported a foreign exchange gain of NT$300 million in the third quarter after the US dollar regained strength amid growing economic uncertainty, the report said.
“We do not factor in foreign currency exchange rates when projecting the company’s financial performance because that is relatively predictable,” Chiu said. “What matters more is sales volume, which failed to pick up this quarter despite it being high season.”
However, Largan had no -intention of cutting capital expenditure, which remained unchanged at NT$1.5 billion for this year, and it will press ahead with plans to expand its manufacturing capacity through next year, Chiu said.
“The company will make a decision on that [expansion] regardless of external developments,” Chiu said.
Sales in China appeared less affected this month, staying flat from last month and making up 10 percent of total revenue, Chiu said.
Largan shares closed down 2.63 percent at NT$667 yesterday, a bigger fall than the TAIEX’s 1.48 percent drop, Taiwan Stock Exchange data showed.
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