Fri, Dec 19, 2014 - Page 14 News List

Ruble hitting Acer, Asus

BRAZILIAN CONNECTION:A manufacturing plant in Brazil will help Chinese PC maker Lenovo manage local costs in the wake of depreciation of the Russian ruble

By Lauly Li  /  Staff reporter

Recent currency depreciation in Russia against the US dollar has started to affect Taiwan’s PC brands, such as Asustek Computer Inc (華碩) and Acer Inc (宏碁), due to their sales exposure in the country, analysts said yesterday.

The news came after Apple Inc said on Tuesday that it decided to halt its online sales of iPhones, iPads and other products to Russia amid the nation’s financial turmoil, triggered by the steep decline in the ruble, which has fallen by more than 60 percent since January.

“Some of Asustek’s distributors in Russia have started to evaluate the currency impact and suspend orders,” CIMB Securities Ltd analysts led by Wang Wanli (王萬里) wrote in a research note yesterday.

Wang said he expects that the currency volatility will affect Asustek’s sales in eastern Europe, after the company’s sales last month showed a weakening notebook trend that was partially linked to the declining ruble.

Asustek’s sales for last month dropped 0.7 percent from a year earlier, but rose 5.1 percent from October to NT$48.94 billion (US$1.58 billion). Excluding the company’s smartphone business, Asustek saw its notebook and motherboard sales fall by 7 percent year-on-year last month, Wang said.

Credit Suisse AG echoed CIMB’s view, saying that the recent depreciation of the Russian ruble and the Brazilian real has led to selling pressure for Asian PC companies, including Lenovo Group Ltd (聯想), Acer and Asustek.

Credit Suisse said in a client note yesterday that it estimates Lenovo’s sales exposure in Brazil and Russia represents between 10 and 12 percent of its total sales in terms of region, compared with Asustek and Acer, which have between 5 and 7 percent in sales exposure.

“Among the Asia brands, Lenovo has led PC market-share in both Russia and Brazil, while Asustek shipped the highest percentage of its PC volume into Russia and Acer into Brazil in the first three quarters this year,” Credit Suisse research analyst Thompson Wu (武光明) said in the note.

Lenovo PCs enjoy a market share of 15.3 percent in Brazil and 21.7 percent in the Russian market, Wu said.

Asustek commands 18.4 percent of Russia’s PC market and 3.8 percent in Brazil, while Acer accounts for 12.2 percent in Russia and 8.5 percent in the Brazilian market, he said.

“The currency decline in both countries will have limited hedging benefits for the PC companies,” he said.

However, Lenovo is the only Asian PC vendor with manufacturing in Brazil, which would help the company manage local costs amid the depreciation of the ruble, he said.

In Taiwan trading yesterday, shares of Asustek declined 0.75 percent to NT$331.5, while Acer shares remained unchanged at NT$20.65.

Lenovo shares closed at HK$9.91, down slightly from Wednesday’s HK$9.93.

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