Although metal casing manufacturer Catcher Technology Co’s (可成科技) sales last month beat expectations, analysts warned that a capacity constraint might last until next month because of plant suspensions and a worsening labor shortage in China.
Furthermore, the company is facing more headwinds ahead after several of its major clients adjusted their sales forecasts downward recently, Primasia Investment Consultancy Co said yesterday in a note.
Catcher supplies metal casings for Apple Inc’s MacBook Air, HTC Corp’s (宏達電) smartphones and Research In Motion Ltd’s (RIM) PlayBook tablets, among others.
The company, whose factories in Suzhou in China’s Jiangsu Province were partially shut down in October because of environmental disputes, said in a statement yesterday that its consolidated sales last month fell 18.87 percent from a month earlier to NT$2.61 billion (US$86.3 million).
That compares with Primasia Investment’s forecast sales of NT$2.5 billion to NT$2.6 billion, which it cut by 20 percent the previous month because of uncertainty on when Catcher’s factories would resume operations.
In October, Catcher said a partial shutdown of its Suzhou factories could cause a 20 percent fall in sales for the month from the September level and warned that its sales for last month could drop by as much as 40 percent from the September level if the factories remained closed.
However, as the company has begun moving a portion of its machinery in Suzhou to facilities in Suqian, Jiangsu Province, to make up for lost capacity, Catcher saw its October sales fall by a lighter 15.85 percent month-on-month to NT$3.21 billion, while sales last month fell 31.73 percent from September’s figure, company data showed.
On an annual basis, Catcher’s sales last month were up 3.21 percent from the same month last year. Cumulative sales in the first 11 months of the year reached NT$32.6 billion, 68.2 percent higher than a year earlier.
Since the partial shutdown of its Suzhou facilities in early October, Catcher has been installing air-filtering machines, running production tests and negotiating with the government in China. However, the company still could not say when its Suzhou facilities would resume full operations.
“Its restart schedule is behind market expectations of mid--November as Catcher waits for government approval, and we now see this taking place in mid-December,” Primasia Investment said.
“Moreover, an early Lunar New Year holiday may also cause a labor shortage in China starting this month .... Catcher’s profitability in December and January may be impacted by the labor shortage,” Primasia said.
Adding to concerns is the gloomier economic outlook in the US and Europe, which has prompted several of Catcher’s clients to slash their sales forecasts recently.
On Nov. 23, HTC cut its sales forecast for the October-December period to NT$104 billion (US$3.41 billion), from its previous estimated range of NT$125 billion to NT$135 billion. RIM on Friday last week revised downward its earnings and sales guidance for this year because of falling shipments of BlackBerry smartphones and PlayBook tablets.
As such, Primasia expects Catcher’s October-to-December sales to fall by 20 to 25 percent from the third quarter’s NT$10.77 billion, it said.
However, Citigroup Global Markets is more optimistic. It said in a research note that Catcher’s sales may have already hit the bottom last month, as the company had started moving production to other sites and had digested the order backlog from October.