Pneumatic components supplier Airtac International Group (亞德客) yesterday reported that its profit declined by 38.53 percent last quarter from a quarter earlier due to severe market competition and wage adjustments for its employees in July.
The company, which generates more than 80 percent of its total sales from China, said in a filing with the Taiwan Stock Exchange that its net profit was NT$378.05 million (US$12.44 million), or NT$2.21 per share, last quarter.
The figure was down from NT$615.06 million, or NT$3.61 per share, the previous quarter, and also 22.7 percent lower than the NT$489.07 million, or NT$3.04 per share, it made the previous year, according to the filing.
Last quarter’s earnings were higher than Credit Suisse analyst Jerry Su’s (蘇厚合) estimate of NT$366 million (or NT$2.15 per share), but lower than the market consensus of NT$475 million (or NT$2.7 per share).
Airtac also said gross margin dropped to 53.26 percent last quarter from 56.33 percent the previous quarter and 55.78 percent the previous year.
That was compared with Credit Suisse’ estimate of 53.3 percent and the market consensus of 54.6 percent.
The company yesterday did not elaborate on last quarter’s results or its guidance for this quarter.
Airtac reported earlier that revenue for last quarter dropped 10 percent quarter-on-quarter to NT$2.14 billion, though up 6 pecent year-on-year, as market competition intensified, especially from Japan-based SMC Corp, the world’s largest pneumatic component maker and the biggest in China.
“In contrast to SMC, which sees increasing demand from the semiconductor space in the December quarter, Airtac is looking for a better presence in the electronic space, where pricing competition may continue,” JPMorgan Securities Ltd said in a client note on Wednesday.
As the company faces muted growth in the construction area and has limited exposure to the automation business, JPMorgan said the company could face a challenging year ahead.
In August, the company forecast revenue would likely contract by between 5 percent and 10 percent this quarter from last quarter.
Credit Suisse forecast Airtac’s revenue for this quarter would decline by 10 percent because of seasonal factors and growing pressure on selling prices.
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