Local contract electronics makers such as Pegatron Corp (和碩) and Inventec Corp (英業達) are under pressure as the New Taiwan dollar’s and Chinese yuan’s fluctuations against the US dollar affected their financial results for last quarter.
“The strong NT dollar and the weak yuan against the US dollar are considered negative factors in the company’s non-operating performance last quarter,” a Pegatron investor relations official said by telephone.
Investors focus on Pegatron’s foreign-exchange figures is when the company releases its earnings performance every quarter.
The company has manufacturing plants Shanghai, Chongqing, Suzhou and Kunshan, China. It pays construction and plant maintenance costs, as well as workers’ salaries in yuan.
Pegatron’s component purchases and inventories in China are quoted in yuan, which means a depreciation in the currency causes losses in production value, it said.
Pegatron posted its highest quarterly currency loss at NT$1.42 billion (US$44.69 million at current exchange rates) in the second quarter of this year due to yuan’s 2.64 percent decline against the US dollar in the April-to-June quarter, erasing about NT$0.55 per share of the firm’s NT$1.55 earnings per share over the same period.
The scale of the yuan’s 0.4 percent decline against the greenback last quarter was smaller than the previous quarter’s 2.64 percent, the company official said.
However, it is still early to tell if the scale of yuan’s exchange losses last quarter would be smaller than the previous quarter’s as the financial results have not been finalized, the official added.
Inventec said the NT dollar’s sharp appreciation of 2.85 percent last quarter was expected to have a greater influence on the company’s earnings result for last quarter, compared with the effect of the yuan’s 0.4 depreciation over the same period.
“The scale of the NT dollar’s appreciation is much larger than the weakness of the yuan last quarter,” an Inventec investor relations official said by telephone.
Wistron Corp (緯創), Quanta Computer Inc (廣達) and Compal Electronics Inc (仁寶) have said they expect currency exchanges to weigh on their financial results for the quarter ending on Sept. 30.
They declined to offer a range of impact forecasts on their earnings performance for last quarter, as they have not concluded the financial results.
In related news, local PC vendors Acer Inc (宏碁) and Asustek Computer Inc (華碩) confirmed that they raised their product prices in the UK market this month in response to the weakening pound.
Acer’s and Asustek’s move came after Dell Inc and HP Inc hiked their product prices by 10 percent in July and August respectively in the wake of Brexit.
Asustek said it suggested its British retail partners to increase prices by 9 percent.
Acer did not disclose the range of its price hike, saying it wants to offer flexibility to local retailers when deciding on retail prices.
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