Fri, Oct 28, 2011 - Page 12 News List

Delta escapes floods but forecasts lower Q4 sales

By Crystal Hsu  /  Staff Reporter

Delta Electronics Inc (台達電), the world’s top manufacturer of switching power supplies, said its manufacturing facilities in Thailand have not fallen victim to flooding and component disruptions were very limited, although it maintained a cautious outlook for the current quarter.

“The plant in Thailand has been spared from the floodwaters because it was built on higher ground,” vice chairman and chief executive Yancey Hai (海英俊) told an investor’s conference yesterday.

“We did feel uneasy when the floods spread southward,” Hai added.

A few component suppliers have been hit by the floods, but disruptions have been minimal, Hai said.

However Delta, which supplies power adapters for notebook computers by Hewlett-Packard Co, Apple Inc and other major PC brands, said its sales would drop in the fourth quarter on softening demand as the global economy flounders while its solar energy business remains a drag.

Overall sales are likely to weaken by 10 percent in the fourth quarter from the July-to-September period when consolidated revenues totaled NT$44.6 billion (US$1.48 billion), Hai said.

The figures represented a mere 2 percent sequential increase from the second quarter and a decline of 9 percent from a year earlier, the company’s report showed.

Net income dropped 38.84 percent year-on-year to NT$2.85 billion last quarter as its energy management segment, which accounted for 18 percent of total revenue, incurred losses of NT$129 million, the report said.

In the first nine months of the year, Delta made NT$8.53 billion net profit, including NT$1.05 billion in foreign exchange gains, the report said. Earnings per share were NT$3.55 in the third quarter, down from NT$5.15 a year earlier.

Regardless, Delta aims to expand its earnings next year, Hai said.

“The gloomy outlook is just not an excuse to stop seeking growth,” Hai said, expecting sales growth in the information appliance, display, server and components segments next year.

Sales of power electronics, the company’s main source of income, contributed NT$28.68 billion in the third quarter, slowing 10 percent from a year earlier, the report said.

Its gross margin improved to 19.2 percent in the third quarter from 19 percent three months earlier and is expected to trend down this quarter on weakening revenues, Hai said.

Operating expenses climbed to NT$5.74 billion in the third quarter, from 5.29 billion a year earlier, as labor costs in China kept rising, providing further incentive to promote automation, Hai said.

Meanwhile, the company is keeping watch for opportunities to acquire distributors in China to boost sales there, Hai said.

The company’s board yesterday approved plans to set up a 100 percent subsidiary, tentatively named Delta Green Life Co (台達綠生活), with a share capital of NT$3 billion.

Delta’s shares closed down 1.07 percent at NT$73.9 yesterday.

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