Yeong Guan Energy Technology Group Co (永冠能源), which produces advanced casting components for specialized applications, yesterday said insufficient capacity for large-sized components might continue to drag on its revenue growth in the coming quarters.
The shortfall in capacity is especially severe for components used in offshore wind power turbines, a company investor relations official told a news conference in Taipei.
The official, who declined to be named, said the company plans to expand its capacity in view of the soaring demand in the global wind energy market.
Yeong Guan operates one plant in Taiwan and five in China, with an annual capacity of 218,400 tonnes, she said.
The company’s new plant in Shanghai is to start production trials by the end of this month, with the capacity expected to reach 60,000 tonnes in the second half of next year.
Yeong Guan said it is still seeking a site for a new plant in Thailand, which it forecast would produce 48,000 tonnes of casting components a year.
The company said it plans to raise its overall capacity to 326,400 tonnes a year in the near term, without giving a detailed schedule.
The planned capacity expansion would increase the company’s operational expenses going forward, the official said, adding that Yeong Guan has set aside NT$1.3 billion (US$40.9 million) for capital expenditure this year and NT$1.25 billion for next year.
In the third quarter of this year, the company’s revenue declined 14 percent quarter-on-quarter to NT$1.71 billion and net profit plunged 52 percent to NT$156 million from NT$308 million.
Shipments during the period shrank 11 percent to 36,158 tonnes, compared with the previous quarter’s 40,447 tonnes, company data showed.
The company is cautious about this quarter and conservative about next year, saying that shipments next year are expected to reach between 140,000 and 160,000 tonnes, compared with this year’s nearly 145,000 tonnes.
The firm plans to raise the revenue contribution of its wind power business from this year’s 55 percent to 60 percent next year, while sales contribution from its non-energy businesses could decline from 45 percent to 40 percent.
Yeong Guan shares fell 4.61 percent to close at NT$103.5 in Taipei trading yesterday, underperforming the benchmark TAIEX, which fell 2.12 percent to 8,957.76 points.
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