Compal Electronics Inc (仁寶) yesterday said its net income declined in the first quarter, dragged by foreign-exchange losses of NT$1.64 billion (US$54.19 million) due to the appreciation of the New Taiwan dollar and bad debts from China-based LeEco (樂視).
Net profit was NT$1.07 billion last quarter, a 33 percent decline from last year’s NT$1.6 billion and 59 percent from the prior quarter’s NT$2.61 billion, Compal data showed.
“The performance of Compal’s core business was actually better than forecast. Earnings were mainly eroded by the strong New Taiwan dollar,” Compal president Ray Chen (陳瑞聰) told an investors’ conference at the company’s headquarters in Taipei.
LeEco’s payment delay also contributed to Compal’s year-on-year contraction in net profit, Chen said, adding that the company booked NT$688 million in bad debts last quarter.
Compal’s gross margin was 4.2 percent last quarter, the same as the first quarter last year, while its operating margin was 1.6 percent, the same as a year earlier, supported by better-than-expected notebook shipments, Chen said.
Chen said Compal forecast that notebook shipments, which contributed 76 percent of its overall revenue last quarter, would expand by a low-single-digit percentage from last quarter’s 9.2 million units on replacement demand for commercial notebooks.
Shipments of smart devices, such as smartphones, tablets and “smart” home products, are expected to jump 50 percent this quarter from last quarter, as many of Compal’s clients launch new tablets this quarter, Chen said, adding that the company shipped a smart home product for a client this month.
Chen in January told reporters that Compal is collaborating with Microsoft Corp to help the US company manufacture a smart home product.
It is widely believed that the product is Microsoft’s first smart home assistant, Invoke.
Chen declined to confirm whether Compal has entered the supply chain for Apple Inc’s Apple Watch, saying that it cannot comment on anything related to its clients.
However, he said the company has an optimistic outlook for growth momentum in smartwatches this year.
“Smartwatch shipments are expected to start picking up significantly from the next quarter and the business is likely to contribute a low-single-digit percentage to Compal’s revenue this year,” he said.
The Compal board yesterday approved the distribution of a cash dividend of NT$1.2 per common share based on last year’s earnings of NT$1.88 per share, or NT$8.13 billion in net profit.
The planned distribution represents a payout ratio of 63.82 percent and a yield of 5.85 percent based on its closing price of NT$20.5 on the local bourse yesterday.
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