Tue, May 01, 2012 - Page 12 News List

Simplo predicts Q2 double digit earnings growth

LOOKING FORWARD:A company official said the firm was maintaining a large cash reserve to fund expansion, although no target had been identified

By Crystal Hsu  /  Staff reporter

Simplo Technology Co (新普科技), the world’s largest notebook battery pack supplier, expects earnings to rise by double digits this quarter from the previous quarter, but still lag behind the same quarter last year, as global demand for laptops and tablets slowly recovers, company chairman Raymond Sung (宋福祥) said yesterday

The Hsinchu-based company, whose clients include Apple Inc and other international computer makers, forecast a net profit of NT$857 million (US$29.3 million) to NT$940 million for the second quarter, or an increase of between 13 percent and 24 percent from the first quarter, its report said.

The estimate suggests a nearly 10 percent decline year-on-year from last year’s NT$951 million net profit, as Europe’s debt problems and tepid recovery in the US continue to curb demand, Sung said.

First-quarter net income totaled NT$758 million, slumping 29.16 percent from the previous quarter, when Simplo posted its strongest quarterly earnings in six quarters, at NT$1.07 billion, as a result of gains in orders and customers.

The showing was slightly better than the company’s guidance and translated into earnings per share of NT$2.7, Sung said.

Simplo has approved the distribution of NT$6 per share as a cash dividend for last year’s earnings, compared with NT$5 the previous year, Sung said, adding that the company wanted to retain a sizeable cash reserve for future expansion, though no targets had yet been determined.

The company’s China-based factories are running at full capacity and Simplo might build a new plant to meet growing demand, Sung said.

Global PC shipments are expected to expand a mild 5 percent this year, but Simplo could outperform the industry, thanks to its diverse clientele, Sung said.

Sung said he holds a conservative view about the outlook for Ultrabooks — lightweight laptop models promoted by Intel Corp — saying they are no match for Apple’s Macbook Air unless vendors lower their prices significantly.

Gross margin stood at 13 percent last quarter and could drop 1 percent or 2 percent this quarter, amid increasing personnel costs in China, Sung said, adding that the recent leadership reshuffle in Chongqing had no impact on the company’s operations there.

“It is unlikely for component suppliers in the information technology sector to trend up. What matters is the bottom line, which looks more promising for the second half of the year than the first half,” Sung said.

Sung voiced support for the government’s electricity price hikes this month to reflect higher energy purchasing costs. The company is also experimenting with making battery packs for use in scooters, he said.

Shares in Simplo closed down 0.88 percent at NT$225 yesterday, compared with the TAIEX’s 0.28 percent gain, Taiwan Stock Exchange data showed.

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