Pegatron Corp (和碩), one of Apple Inc’s iPhone assemblers, yesterday said that its revenue would climb by between 5 and 10 percent annually this year supported by rising orders from its communication, consumer electronics and computing products.
“We are cautiously optimistic about Pegatron’s operations this year. The communications department is to introduce a product that has significant changes in details, which we believe it will not let consumers down,” Pegatron chief executive officer S.J. Liao (廖賜政) told an investors’ conference at the company’s headquarters in Taipei.
Pegatron’s communications department, which includes smartphone assembling and networking products, contributed 72 percent of overall revenue of NT$360.48 billion (US$11.64 billion) last quarter, company data showed.
The department’s largest client is Apple, which is expected to launch its next-generation iPhone this year to celebrate the 10th anniversary of the device’s launch.
Liao said rising demand for gaming PCs and new gaming consoles would support Pegatron’s computing and consumer electronics businesses this year.
The Pegatron board approved a capital expenditure plan of between US$400 million and US$450 million to significantly expand the company’s production capacity this year to meet customer demand, Pegatron chief financial officer Charles Lin (林秋炭) said.
The capital expenditure is at least double last year’s US$200 million.
Liao said in his outlook for the current quarter that revenue from the non-computing sector, which makes up 87 percent of the firm’s revenue, is to contract by between 35 percent and 40 percent quarter-on-quarter due to the slow season for communications and consumer electronics products.
Revenue will improve significantly in the second half of this year, when communications and consumer electronics clients launch new products, Liao said.
The remarks from the top executives came after the company posted net income of NT$19.34 billion, or NT$7.5 per share, for last year, down 18.7 percent from NT$23.81 billion, or NT$9.23 per share, the previous year.
It was Pegatron’s first annual decline in earnings since the company listed on the Taiwan Stock Exchange in 2010, company data showed.
Gross margin dropped 0.8 percentage points to 5.4 percent last year, while operating margin fell 0.5 percentage points to 2.8 percent, the data showed.
Lin attributed the earnings decline to slowing demand last year.
Combined foreign-exchange losses of NT$4.37 billion also weighed on the earnings performance, he said.
The board approved the distribution of a cash dividend of NT$5 per share. The planned distribution translates into a payout ratio of 66.66 percent, higher than the previous year’s 54.5 percent.
That represents a yield of 6.03 percent based on the company’s closing price of NT$82.8 in Taipei trading yesterday.
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