Lite-On Technology Inc (光寶科技) yesterday posted a 24 percent sequential decline in net profit for last quarter as the electronic component maker grapples with a wider inventory write-off and losses from subsidiaries.
However, Lite-On gave an above-seasonal outlook for the its core businesses for the current quarter. Revenue is likely to hold steady this quarter, against last quarter’s NT$60.61 billion (US$1.98 billion) — a two-year high.
“The fourth quarter is usually a soft season,” Lite-On chief executive Warren Chen (陳廣中) told investors in a conference call.
“However, this year, the top line in the fourth quarter will be flat compared with the third quarter, driven by higher demand for high-end power supply units used in servers and consumer electronics due to new product launches by customers. Demand for LED [components] and LED lighting will also be better,” he said.
The company expects to continue booking ongoing inventory write-offs this quarter, Chen said.
“We hope this inventory problem will be solved next year, as we have engaged with our clients better and are enhancing our cost controls,” he said.
Net profit last quarter fell to NT$1.55 billion compared with NT$2.03 billion in the second quarter. On an annual basis, profit shrank 36 percent from NT$2.42 billion.
Lite-On attributed the decline to NT$700 million in inventory write-offs last quarter compared with NT$500 million a quarter ago, as well as losses of NT$960 million from its mobile handset casing subsidiary, Lite-On Mobile (光寶移動), and its handset keypad manufacturing arm, Silitech Technology Corp (閎暉).
The group expects both subsidiaries to return to profit next year due to significant improvements in operating efficiency.
Gross margin contracted to 12.3 percent last quarter, compared with 13.5 percent in the second quarter and 14.6 percent in the previous year.
As operating margin fell to 3.1 percent last quarter from 4.1 percent a quarter ago and 5.3 percent a year before, the company “will miss its target of keeping operating margin at 4.7 percent [last year’s figure] this year,” Chen said.
Lite-On plans to spend between NT$500 million and NT$600 million on new equipment this year, accounting for up to 3 percent of total revenue. Next year, capital spending is also expected to be about 3 percent of total revenue.
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