Wed, Mar 06, 2013 - Page 13 News List

Pegatron’s fourth-quarter profit best in three years

By Lisa Wang  /  Staff reporter

Pegatron Corp (和碩), the PC manufacturing arm of Asustek Computer Inc (華碩), yesterday posted its best quarterly net profit in about three years, on the back of robust seasonal demand for smartphones and sales of customers’ new products, such as Apple Inc’s iPad Mini.

Net profit almost doubled to NT$2.65 billion (US$89 million), or NT$1.18 per share last quarter, compared with the third quarter’s NT$1.35 billion, or NT$0.6 per share, and a 1.7-fold growth from NT$975 million, or NT$0.43 a share, a year ago, according to the company’s financial statement.

The results marked the highest level since the third quarter of 2009, when Pegatron reported a net profit of NT$3.5 billion, or NT$1.54 a share, although the strong performance included a gain of NT$3.29 billion in non-operating income, up 69 percent sequentially.

Operating income grew nearly three-fold to NT$637 million last quarter from NT$160 million in the third quarter of last year, exceeding Credit Suisse analyst Thompson Wu’s (武光明) forecast of NT$528 million.

Operating profit margin improved from 0.1 percent to 0.3 percent during the same period, according to Pegatron’s financial statement.

“In the fourth quarter, the margin improvement was a result of strong revenue and high factory utilization,” Pegatron chief executive officer Jason Cheng (程建中) said.

In a report issued on Friday last week, Wu attributed the margin expansion to an increase in orders for the iPad Mini and iPhone 4, which helped boost Pegatron’s factory utilization.

“This year, improving operating profit margin will continue to be our priority. We hope this year’s figure will be higher than last year,” Cheng said.

Pegatron’s operating profit margin jumped to 0.2 percent from minus-0.9 percent in 2011.

For this quarter, Pegatron forecast across-the-board declines for its three major product segments, blaming seasonally slow demand for notebook computers, consumer electronics, such as LCD TVs, game consoles and e-readers, and communications products.

“Revenue will drop slightly [sequentially] in the first quarter, but it should not be a particularly weak period for us,” Cheng told reporters on the sidelines of the company’s investors’ conference.

Revenue will regain momentum next quarter and grow quarter-by-quarter this year, he said.

Last month, Pegatron chairman Tung Tsu-hsien (童子賢) said the company aimed to grow its revenue to NT$1 trillion this year, up 30 percent from last year’s NT$768 billion.

Pegatron counts Apple and Google Inc as its major clients for tablets and smartphones.

Tablets will be one of the fast-growing areas and Cheng said shipments this year will more than double from last year’s 10 million units.

Notebook shipments are expected to contract between 20 percent and 25 percent sequentially this quarter, while shipments of desktops and motherboards will plummet by between 30 percent and 35 percent, he said.

Revenue from consumer electronics will be flat, or drop 5 percent at a quarterly pace, while revenue for communications products will decline by between 30 percent and 35 percent, the company said.

Computer products were the biggest source of revenue for Pegatron last quarter, accounting for 39 percent of its overall revenue of NT$238.83 billion, down from 63 percent a year ago.

Consumer electronics and communications products made up 33 percent and 28 percent shares, up from 22 percent and 15 percent respectively.

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