Wed, Mar 11, 2015 - Page 13 News List

Wistron looks to ‘smart’ sector to fuel rebound

CONTROLLING COSTS:Given a new awareness of its labor needs in China, Wistron’s chief executive expects that related costs will not surge this quarter

By Lauly Li  /  Staff reporter

Contract notebook computer maker Wistron Corp’s (緯創) net profit dropped 37.51 percent to NT$579 million (US$18.3 million) last quarter from NT$926 million the prior year on higher labor costs, an increase in spending on new business and lower factory utilization.

On a quarterly basis, net profits tumbled 60 percent from NT$1.45 billion in the third quarter last year.

That brought the company’s total net profit last year down 37.78 percent to NT$3.57 billion from NT$5.75 billion in 2013.

Gross margin shrank to 4.49 percent in the final quarter of last year, compared with 5.25 percent the prior quarter and 5.11 percent the prior year.

“The last quarter was a particularly difficult time for us, due to the surging hiring costs in one specific plant in China because of a labor shortage, which resulted in very low operating income and low net income,” Wistron chairman Simon Lin (林憲明) told an investors’ conference.

Wistron’s new business, including touchpanels and electronics recycling services, also encountered difficulties last year, Lin said.

However, fueled by increasing demand for its smart devices, including televisions, tablets and in-car electronics, this will be a better year, Lin said.

Shipments of all product lines will increase 20 percent to 81.48 million units from last year’s 67.9 million units, driven by the smart device segment, Lin said.

Wistron expects mobile device shipments — including in-car electronics — to grow 25 percent annually to 20 million units this year.

Shipments of Wistron’s servers will grow 10 percent to 2.14 million units this year from last year’s 1.95 million units, Lin said, while laptop computer shipments would be flat or grow by a single-digit percentage from last year’s 21 million units.

Given a new awareness of its labor requirements in China, Lin said Wistron expects that related costs will not surge this quarter.

The company is also adopting industrial automation in the product lines to manage labor costs, Lin added.

Operating margin this quarter is expected to improve slightly from last quarter’s 0.34 percent due to improving management of labor costs, Lin said.

Revenues are expected to grow year-on-year because of a lower base last year, but it could be flat or decline from the prior quarter due to the slow season, Lin said.

Market researcher JPMorgan Securities Ltd said in a report on Wednesday last week that it expects Wistron’s revenues to drop 20 percent quarter-on-quarter to NT$139.91 billion this quarter, due to seasonally weak PC demand.

“We are cautiously optimistic about our notebook business this year,” Lin said.

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