Delta Electronics Inc (台達電), the nation’s top supplier of power supply units, yesterday reported lower-than-expected net profits during the second quarter of the year, as slowing economic growth in China negatively affected its industrial-automation business expansion there.
More than half of the company’s industrial-automation product sales are generated from the Chinese market.
In the April-to-June quarter, Delta reported net profit of NT$4.33 billion (US$144.77 million), or earnings per share of NT$1.78, up 3 percent quarter-on-quarter and 2 percent year-on-year, according to the company’s latest financial report.
However, the figure missed UBS Securities’ estimate of NT$4.4 billion and JPMorgan Securities Asia Pacific Ltd’s NT$5.08 billion, as the brokerages expected an improved product mix and lower operating expenses to continue lifting the company’s gross margin and profitability.
Delta’s gross margin of 10.95 percent in the second quarter also missed a market consensus of 11.7 percent. Due to an expanded product portfolio, Delta’s second-quarter gross margin improved 10 percent quarter-on-quarter and 2 percent year-on-year, it said.
Supported by increased sales in its energy management and smart green life businesses, Delta’s net profits during the first two quarters of the year expanded 22 percent to NT$8.52 billion from NT$6.96 billion during the same period last year.
Earnings per share increased to NT$3.51 during the first six months of the year from NT$2.87 a year ago, according to the report.
“Delta, along with all players in the power supply market, are turning more cautious after HSBC’s China purchasing managers index has fallen,” Delta chairman Yancey Hai (海英俊) said.
Yet Hai said he is confident that Delta’s sales and profit would improve during the second half of the year compared with the first half.
However, given macroeconomic uncertainties still exist, the strength of the growth can hardly be predicted in numeric terms, he said.
Hai said the firm’s industrial-automation, Internet-related and “smart green” concept product sales would keep growing on a quarterly basis.
Last quarter, Delta’s power electronics business, which covers industrial-automation products, contributed 54 percent of the company’s total sales, while its energy management and smart green life businesses contributed 22 percent and 19 percent respectively.
“The company is aggressive in developing energy-efficient products, like molding power chokes for high-end smartphones and tablets, as demand for such passive components appears strong,” Hai said.
Delta will mass produce molding power chokes, which generate higher profits, from this quarter, the company said.
The Taipei-based company also the entered vehicle drive system market and expects sales to contribute 1 percent of the company’s total sales after two years.
Delta shares closed down 6.07 percent at NT$131.5 in Taipei trading yesterday, the lowest level since April 12. The benchmark TAIEX fell 0.8 percent.