Wed, Nov 01, 2017 - Page 12 News List

Delta net income slides on labor costs, falling prices

PICKING UP THE SLACK:Revenue from the automation and infrastructure segments was robust, with automation expected to maintain its high performance this quarter

By Lauly Li  /  Staff reporter

Delta Electronics Inc (台達電), the nation’s leading power and thermal solutions provider, yesterday posted net income of NT$5.46 billion (US$180.97 million) for last quarter, a decrease of 5.3 percent annually due to increasing labor costs and falling average selling prices for components used in computers.

The figure represents Delta’s second consecutive annual decline in quarterly net profit, company data showed.

“Notebook computer components, such as power components and fans, faced strong pricing pressure... The labor and depreciation costs weighed on the margin performance as well,” Delta chairman Yancey Hai (海英俊) told an investors’ conference at the company’s headquarters in Taipei.

Delta’s gross margin last quarter fell 1.57 percentage points year-on-year to 27.08 percent.

Its operating margin also dropped 2.06 percentage points annually to 9.12 percent, the data showed.

Earnings per share were NT$2.1, compared with the NT$2.18 in the same period last year.

In an effort to maintain profitability in the electronics components business, Delta carefully selects the projects proposed by clients, Hai said.

“If the components’ average selling prices are cut too deeply for the project, we would choose not to take the orders,” Hai said.

Compared with the soft performance in the electronics components segment, revenue from automation and infrastructure maintained robust growth momentum last quarter.

Revenue from the automation segment jumped 19 percent annually last quarter, while the information and communications technology infrastructure segment recorded a nearly 10 percent year-on-year increase in sales.

Hai attributed the revenue growth in automation to persisting robust demand from China amid a labor shortage and rising wages.

This quarter, the operation is expected to defy Delta’s historic pattern by keeping a similar high performance from last quarter, instead of posting a quarterly drop in revenue, Hai said.

“This quarter will not decline from last quarter, as we continue to ship components for a big client’s new smartphone model from our recently expanded plant in China,” Hai said.

Although Hai did not mention the smartphone model by name, it is widely believed to be Apple Inc’s iPhone X, which is scheduled to start shipping this month.

Delta forecast that revenue in the automation segment, which includes industrial and building automation solutions, will climb by a double-digit percentage next year from this year, Hai said.

Delta plans to continue investing research and development resources into the automation segment to improve its capability in systems, services and the integration between software and hardware in the segment, Hai added.

Delta shares remained unchanged at NT$145 in Taipei trading yesterday, while the TAIEX rose 0.34 percent.

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