Sat, Aug 25, 2012 - Page 13 News List

Simplo expects earnings to drop in Q3

WEAKNESS AHEAD:The battery pack manufacturer is pursuing revenue growth at the expense of profitability amid slowing demand for electronics products worldwide

By Crystal Hsu  /  Staff reporter

Simplo Technology Co (新普科技), the world’s largest notebook battery pack supplier, said yesterday its revenue might grow by double digits this quarter, but earnings might edge down as the company focuses on boosting its topline amid slack demand worldwide for electronic products.

Overall sales could hit NT$16 billion (US$533.33 million) to NT$16.2 billion during the July-to-September period, representing an 11 percent increase from the second quarter’s NT$13.73 billion, Simplo chairman Raymond Sung (宋福祥) told an investors’ conference in Taipei.

However, operating earnings could slip by 1 percent to between NT$1.01 billion and NT$1.06 billion, compared with NT$1.11 billion in the preceding quarter, Sung said.

“Given the weak demand for IT [information technology] products, the company has no choice but to sacrifice profitability a bit to expand its market share,” Sung said.

“Except for a minor few, most customers have taken a beating from the global economic slowdown,” he added.

The Hsinchu-based company supplies battery packs used in laptops and tablets manufactured by Apple Inc, Hewlett-Packard Co, Dell Inc, Acer Inc (宏碁), Asustek Computer Inc (華碩) and China’s Lenovo Group Ltd (聯想), among other technology giants.

Net income is likely to fall somewhere between NT$948 million and NT$1.12 billion this quarter, translating into earnings per share (EPS) of NT$3.08 to NT$3.62, Sung said, based on two-month order visibility.

Sung also voiced doubts about a strong recovery in the fourth quarter, but added that tablets were likely to grow faster than notebooks in volume terms.

No matter how the PC market turns out, Simplo is poised to outperform the industry as in past quarters, he said.

Supply to Lenovo has seen stable growth and the company aims to strengthen its cooperation with the Chinese PC maker as it gains market share, Sung said.

Simplo reported a net profit of NT$947 million in the second quarter, better than its guidance of between NT$857 million and NT$940 million, company data showed.

That translates into EPS of NT$3.07, up 24.9 percent from NT$2.46 in the first quarter, company figures showed.

For the first half of the year, net profit totaled NT$1.7 billion, rising 5.97 percent from the same period last year.

Stock analysts were cautious about Simplo’s stock performance in light of profit pressures.

One analyst with a European bank said he expected Simplo shares to fall on Monday to reflect the company’s expected margin fall.

Another analyst from a leading Taiwanese securities house agreed, saying chances of a pickup were slim based on the company’s earnings guidance.

Simplo closed down 1.84 percent at NT$186.50 yesterday, underperforming the TAIEX, which slid 0.37 percent, Taiwan Stock Exchange data showed.

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