Fri, Apr 14, 2017 - Page 12 News List

Taiwan’s largest aircraft maker bullish over long term

By Ted Chen  /  Staff reporter

Aerospace Industrial Development Corp (AIDC, 漢翔航空工業), the nation’s largest civilian and military aircraft manufacturer, yesterday said it remains confident in long-term market prospects despite a slip in demand for new aircraft.

Since oil prices began falling markedly in 2014, airlines have shown less urgency in upgrading their fleets, leading to declining deliveries for AIDC’s major clients, such as Boeing Co and Airbus Group SE, last quarter, the company said at an earnings conference in Taipei.

Orders for helicopter parts were especially hard hit as demand for aerial oil and gas surveying dropped, the company added.

AIDC chairman Anson Liao (廖榮鑫) said that industry forecasts show rising demand through the next decade and the company still has a NT$100 billion (US$3.3 billion) order backlog.

To weather the downturn, the company would improve its product mix and prioritize securing contracts for popular aircraft lines, such as smaller single-aisle airliners, AIDC president Kong Shiah (夏康) said.

Shiah added that sales growth would be slower this year as many of the company’s clients with CFM International turbofan engine equipped single-aisle jetliners are still transitioning from the CFM56 engine to the new LEAP engine.

The company is expecting further foreign-exchange strains as the New Taiwan dollar continues to strengthen.

Last quarter, the New Taiwan dollar averaged at NT$31.1 against the US dollar, compared with NT$33 a year ago, the company said.

“There is significant pressure from the NT$1.9 difference in the strength of the New Taiwan dollar,” Shiah said.

The company’s overseas cash and receivables were last tallied at about NT$270 million at the end of last quarter, he said.

On the other hand, a stronger New Taiwan dollar means lower procurement costs, AIDC chairman Liao said, and imports of raw materials usually eat about half of the company’s profits.

Liao said that the company’s new engine casing and composite material plants have gone online recently, as has a hangar to upgrade the air force’s F-16 A/B jets, but they are not expected to bring a significant earnings gain in the near-term.

“The new facilities need time to acquire the necessary certifications,” Liao said.

The company reported that sales last quarter dipped 6.48 percent annually to NT$5.92 billion.

It also announced plans to distribute cash dividends of NT$1 per share, in addition to NT$0.37 per share in stock dividends, pending shareholder approval.

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