Tue, Aug 13, 2013 - Page 13 News List

PC market changes hit Pegatron profits

DROPS:Sales of consumer electronics dropped 27 percent quarter-on-quarter due to decreased market demand ahead of clients’ new product launches, Pegatron said

By Helen Ku  /  Staff reporter

Pegatron Corp (和碩), an assembler of Apple Inc’s iPhone and iPad products, yesterday reported its second-quarter net profit dropped quarter-on-quarter and year-on-year due to structural changes in the PC market.

During the April-to-June period, net profit contracted 27.2 percent to NT$2.51 billion (US$83.94 million) from NT$3.45 billion in the previous three months and 12.7 percent lower than the NT$2.88 billion during the same period of last year.

Earnings per share were NT$0.61 last quarter, compared with NT$1.62 the previous quarter.

Operating margin fell to 1.3 percent last quarter from 2.2 percent in the January-to-March period because of product mix adjustments and bigger spending on production relocation in China.


“We saw sales and net profit fall last quarter on a quarterly basis because of a decrease in sales of consumer electronics,” Pegatron Pegatron chief financial officer Charles Lin (林秋炭) told an investors’ conference.

“However, due to better-than-expected volume demand from clients, sales of both computing and communications products achieved quarter-on-quarter growth last quarter,” he added.

In line with the company’s previous guidance, Lin said sales of consumer electronics dropped 27 percent quarter-on-quarter last quarter due to decreased market demand ahead of clients’ new product launches.


However, due to better-than-expected demand for notebooks and communications products, sales of computing devices increased 12 percent quarter-on-quarter, with 10 percent growth in sales of communications products.

On an annual basis, due to strong demand for tablets, sales of consumer electronics grew 95 percent, while those of computing products fell 14 percent and those of communications products dropped 15 percent, he said.

Over the past year, Pegatron has seen sales contribution from consumer electronics increase to 27 percent of the company’s total sales last quarter from 14 percent a year ago, while that of computing products dropped to 46 percent and those of communications products fell to 27 percent.

“Overall, the company’s sales performance during the second half is certain to improve from the first half,” Pegatron chief executive officer Jason Cheng (程建中) said.

In the first six months of this year, cumulative profit expanded 61.9 percent to NT$5.96 billion from NT$3.68 billion a year earlier, while total revenue grew 9.9 percent to NT$429.81 billion from NT$391.26 billion over the same period.


“As demand for consumer electronics remains robust and as the July-to-December period is the peak season for PC markets, there is a likelihood that Pegatron’s sales during the second half of the year will receive a boost, mainly from consumer electronics,” he added.

For this quarter, Pegatron forecast sales of non-computing products would grow by between 40 percent and 50 percent quarter-on-quarter.

However, the company forecast notebook shipments would decline by between 5 percent and 10 percent quarter-on-quarter, while its motherboard and desktop shipments would shrink by between 10 percent and 15 percent.

“While we foresee no significant change to the company’s product mix during this and next year, we will watch computing products’ sales more closely and may take orders for new products to optimize our product portfolio,” Cheng said.

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