Wed, Mar 13, 2013 - Page 13 News List

Delta sees quarterly profit fall due to weak PC sales

By Lisa Wang  /  Staff reporter

Delta Electronics Inc (台達電), the nation’s biggest power supply unit maker, yesterday said its net profit declined 20 percent sequentially last quarter as demand fell because of weaker-than-expected PC sales.

Net income shrank to NT$3.75 billion (US$126.52 million) last quarter, compared with NT$4.71 billion in the third quarter of last year. However, it was up 52 percent from NT$2.46 billion in the fourth quarter of 2011.

That brought last year’s total net income to NT$16.11 billion, or NT$6.68 per share, up 47 percent from 2011’s net profit of NT$10.99 billion, or NT$4.56 a share.

“A bigger-than-expected slide in demand for desktop and notebook computers caused demand for our power electronics to fall last quarter,” said Rodney Liu (劉致遠), manager of Delta’s investor services division.

Revenue from power electronics, which made up more than 60 percent of Delta’s NT$42.3 billion revenue last quarter, dropped 9 percent quarter-on-quarter to NT$28.25 billion.

However, gross margin rose to a record-high 25.9 percent last quarter, up from 25.4 percent in the third quarter and 21.1 percent in the fourth quarter of 2011, the company’s financial statement showed.

Company chairman Yancey Hai (海英俊) attributed the improvement to increased shipments of higher-margin products, declines in the prices of raw material and improved demand for industrial automation systems.

“The uptrend will continue this year,” Hai said. “Our target is to keep [margins] at 24 percent for 2013.”

Gross margin rose to 24.5 percent last year, from 21.3 percent in 2011.

Hai also gave a robust forecast for this year, with some new products expected to enjoy at least 15 percent annual growth in sales.

To make up for the falling demand for PCs, Delta has been pushing sales of passive components used in smartphones and tablets, high-end power management systems for servers and data centers, and industrial automation systems, Hai said.

Delta expects its industrial automation business to grow 20 percent this year from last year, as it is boosted by China’s economic revival and increasing rate of factory automation amid rising wages, Hai said.

“China is the biggest driver,” he said.

About half of Delta’s industrial automation systems are exported to China, he added.

Power management systems for cloud computing servers, data centers and base stations will expand by 20 to 30 percent annually, while passive components are expected to grow 15 percent on the back of strong demand for smartphones and tablets, Hai said.

Part of the NT$10 billion in capital spending budgeted for this year will be used to expand passive component capacity, he added.

Delta’s shares slid 0.45 percent to close at NT$112.50 yesterday, outperforming the TAIEX, which fell 0.55 percent.

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