Tue, Apr 01, 2014 - Page 14 News List

Synnex net profits slide 8.57%

MARKET MOVEMENT:Asia’s leading components distributor took hits from market changes and tech trends, but said it expects to return to a profitable path this year

By Kevin Chen  /  Staff reporter

Synnex Technology International Corp (聯強), Asia’s largest distributor of information technology products and electronics components, yesterday said its net profit fell 8.57 percent last year from 2012.

The drop was due to the transition of product models and changes in market structure, but Synnex said it was confident of returning to a growth path this year after its business performance improved gradually last year.

“We expect to grow steadily and should be sustainable in 2014,” the company said in a statement.

Net profit was NT$5.27 billion (US$172.8 million) last year, down from NT$5.77 billion in 2012, and its operating profit fell 14.9 percent to NT$3.88 billion from NT$4.56 billion the previous year.

Earnings per share were NT$3.23 last year, compared with NT$3.54 in 2012.

Synnex shares closed 1.87 percent higher at NT$49.0 yesterday in Taipei trading. The stock has underperformed the benchmark TAIEX by about 22 percent over the past 12 months.

The company distributes smartphones for Lenovo Group Ltd (聯想) and Huawei Technologies Co (華為) in China, markets Apple Inc’s iPhone 5 series of smartphones in Taiwan, Hong Kong and India, and sells Microsoft Corp’s Xbox One in Australia and New Zealand.

In response to changes in technology trends, Synnex said its product line has been expanding from PC-based information products to consumer electronics and commercial PCs and IC components.

The company’s consolidated revenue increased 5.65 percent year-on-year to NT$330.26 billion, with information technology products accounting for 56 percent of total revenue, followed by IC components at 22 percent, consumer electronics at 17 percent and 5 percent for telecommunications products.

“We are paying close attention to technology trends in new products and the momentum of tight-knit, diverse offerings under development. They are expected to be growth drivers [this year],” Synnex said in the statement.

However, Yuanta Securities Corp (元大證券) analyst Vincent Chen (陳豊丰) yesterday said there is a lack of new products to stimulate demand in the current quarter.

"New initiatives to distribute China's branded handsets for China Unicom (中國聯通)have started, but [which] are not big enough to make a difference yet," Chen said in a client note.

Moreover, the company might see some foreign exchange losses this quarter owing to the yuan's rapid deprecation against the US dollar since the beginning of the year, Chen said.

Last year, foreign exchange gains accounted for 16 percent of Synnex's total net profit, but Chen said the gains this year could be rather minor.

For this year, management has said that sales from consumer PCs are to remain consistent with last year, and that sales of commercial PCs, consumer electronics and IC components are to grow by double-digit percentage points from last year, while telecommunications sales would rebound from a low base last year.

China and Hong Kong remained the company’s largest revenue sources last year, accounting for 48 percent, but Synnex said it is developing markets outside of China to pursue a more balanced development in the Asia-Pacific region, according to the statement.

Synnex has operations in more than 300 cities and 32 countries.

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