Fri, Nov 14, 2014 - Page 14 News List

Compal posts Q3 profit growth

SMART PLANS:The firm’s president said it plans to spend funds to increase its capacities for smartphones, tablets and a notebook factory in Taoyuan County

By Lisa Wang  /  Staff reporter

Compal Electronics Co (仁寶電腦), the world’s No. 2 contract laptop computer maker, yesterday posted 9 percent sequential growth in net profit for last quarter, primarily due to a spike in non-operating gains, including those from a joint venture with Lenovo Group Ltd (聯想).

Net profit rose to NT$2.58 billion (US$83.9 million) last quarter, compared with NT$2.37 billion in the second quarter.

Last quarter’s growth was supported by non-operating gains of NT$939 million, including an investment gain of NT$475 million and NT$330 million in foreign exchange gains.

A quarter ago, Compal booked a loss of NT$190 million, primarily from foreign exchange losses of NT$729 million.

Operating profit plunged 26 percent to NT$2.15 billion, compared with NT$2.88 billion a quarter ago, but that is less than NT$3.18 billion estimate by Fubon Securities Investment Services Co (富邦投顧) analyst Arthur Liao (廖顯毅).

Liao gave an “add” rating on Compal’s stock.

This quarter, Compal expects notebook shipments to slide 5 percent sequentially on seasonal weakness, company president Ray Chen (陳瑞聰) told investors.

However, shipments of smartphones and tablets will double this quarter from last quarter, benefiting from rising demand from customers and from new clients, Chen said.

The significant progress in the smart devices will help Compal reach the goal of boosting non-PC contributions to 30 percent of its total shipments this quarter, earlier than its original schedule in next year, Chen said. Last quarter, non-PC shipments made up 21 percent of the total.

Compal this year joined local rival Pegatron Corp (和碩) as one of Apple Inc’s iPad Mini assemblers. Compal also counts among its tablet clients.

Total shipments, including notebook computers, smartphones, tablets and TVs, are expected to grow next year by 25 to 30 percent annually, Chen said.

“Smart devices will be the company’s major growth driver next year,” Compal’s president said.

Notebook shipments next year would be flat, or down by 2 percent, or 3 percent in line with the PC industry’s trend, he added.

Gross margin this quarter will improve from 3.26 percent last quarter, Chen said.

Last quarter, higher labor costs in China cut the firm’s gross margin from 3.9 percent in the second quarter, he said.

Compal plans to budget capital spending ranging from NT$4 billion to NT$5 billion for next year to increase capacities for smartphones, tablets and for a notebook computer factory in Pingzhen (平鎮), Taoyuan County.

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