After reporting improved earnings last quarter, electronic components maker Lite-On Technology Corp (光寶科技) expects sales and margins to grow moderately this quarter on the back of demand for LED lighting and power systems.
“Given weak demand in the PC and smartphone industries, we have to work harder to keep improving Lite-On’s finances this quarter,” Lite-On chief executive officer Warren Chen (陳廣中) told an investors’ conference yesterday.
The company’s camera phone lens module business — which cost the company NT$1 billion (US$32.48 million) in inventory write-offs in the final quarter of last year — is still undergoing operational adjustments and will therefore stay soft this and next quarter, Chen said.
DEEPER PARTNERSHIPS
“Instead of increasing the number of clients, we plan to deepen collaboration with select clients that have a promising business outlook in the smartphone industry,” Chen said.
The company aims to complete changes for this business segment by the final quarter of this year, he added.
For this quarter, Lite-On’s revenue would mainly be driven by LED lighting for automobiles and street lamps, and power supply systems for cloud-computing data centers and automobiles, Chen said.
Last quarter, the two segments saw sales rise 20 percent each from the previous quarter, company data showed.
“Lite-On’s LED street lamps secured the largest share of the US market and held a 40 percent share of the Taiwanese market last year. We believe the strong growth momentum will continue throughout this year,” Lite-On investor and public relations director Julia Wang (王玉玲) said.
While the company is cautious about this quarter’s outlook, revenue for next quarter is expected to grow significantly from a year ago because of a lower base last year, Chen said.
In addition, the company’s keyboard business is likely to gain more market share this year on the back of steady demand from existing clients, despite the overall soft demand in the PC industry, he said.
“The key variables affecting Lite-On’s performance this year will still be camera modules and mechanical products for mobile devices. We will pay extra attention to these two segments,” Chen said.
MARGIN GROWTH
During the January-to-March quarter, Lite-On’s net income grew 15 percent year-on-year and 13 percent quarter-on-quarter to NT$1.65 billion, or NT$0.71 per share, driven by improved operating results from its mobile mechanics segment, coupled with steady growth from its LED business, high-end servers, networking and game console application products, Wang said.
Gross margin improved to 12.5 percent last quarter from 10.9 percent in the previous quarter and 12.4 percent in the same quarter last year. Operating margin also rose to 3.3 percent from 2.4 percent in the previous quarter and 2.7 percent a year earlier.
The company expects gross and operating margins to continue improving this quarter due to the strong demand for LED products and power supply systems, Wang said.
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