Audio electronics maker Merry Electronics Co (美律) yesterday said revenue would drop drastically this quarter as demand freezes due to the consumer electronics sector entering a slow season.
The seasonal weakness will take a heavy toll on headsets for entertainment devices and speakers for mobile phones, the two biggest revenue sources for Merry, in the first three months of this year, company spokesman Allen Huang (黃朝豊) told investors in Taipei.
“Revenue will hit the bottom in February,” he said. “First-quarter revenue will be flat, or slightly lower than in the same period last year.”
Merry posted NT$4.52 billion (US$154.64 million) in revenue for the first quarter of last year.
Huang did not provide a detailed revenue forecast.
Capital Investment Management Corp (群益投顧) early this month projected that Merry would see revenue tumble 33.19 percent to NT$6.88 billion this quarter, compared with last quarter’s NT$10.21 billion.
As revenue scale shrinks, gross margin will dwindle this quarter as well, Huang said.
Gross margin last quarter stood at 16.1 percent, a company financial statement showed.
Huang said he expects handset speakers to contribute greater growth to the company this year than last year.
However, headsets used in entertainment devices will grow at a slower pace of about 10 percent annually following rapid increases of 80 percent last year and 60 percent in 2016, he said.
Merry supplies entertainment headsets, handset speakers, battery packs and hands-free devices to clients such as Apple Inc, Sony Corp, Bose Corp, Logitech Co and Beats Electronics LLC.
Merry shares rose to NT$192, their highest level in about two months, after a 6.67 percent rally yesterday.
The firm’s board on Monday approved a cash dividend distribution of NT$16.442 per common share, representing a payout ratio of 86.81 percent.
Net profit last year jumped to a record-high NT$3.62 billion, or NT$18.94 per share, company data showed.
Merry on Monday announced two merger-and-acquisition deals to step up its expansion into hearing aids and “smart” speakers.
The smart speaker market is expected to enjoy an annual compound growth rate of 35 percent to US$10.2 billion in the 2017-2020 period, Huang said, citing a CITIC CLSA Ltd forecast.
Merry plans to invest 61.6 million yuan (US$9.8 million) to acquire an 82.5 percent stake in China’s largest hearing aid supplier, Austar Hearing Science and Technology (Xiamen) Co Ltd (歐仕達聽力科技廈門), through its subsidiaries, Huang told a media briefing on Monday.
In addition to China, the acquisition of Austar will help Merry quickly enter the US and other markets abroad, as the US Food and Drug Administration has lowered the threshold by adding the new, separate category of over-the-counter wearable hearing aids for adults with mild to moderate hearing loss, allowing the purchase of such devices from a retailer or online, Merry said.
Austar designs and makes hearing aids and sells its branded hearing aids through its own sales channel, Huang said.
Merry also plans to invest US$45.8 million to fully take over Sonavox Group’s Suzhou, China-based subsidiary, Sonavox Canada Inc and Seas Fabrikker.
Sonavox develops and manufactures premium speakers.
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