Metal casing supplier Casetek Holdings Ltd (鎧勝) yesterday posted its weakest quarterly net profit in six years as one-off redesign work on Android smartphones eroded its gross margin.
Net profit for last quarter fell 73.5 percent from a year earlier and 56.3 percent sequentially to NT$286 million (US$9.76 million).
The change in design drove up production costs, prompting its Android phone clients to delay shipments last quarter.
Casetek said it does not expect a quick recovery in revenue, margin or profit in the first two quarters of this year.
“We are conservative about the outlook for the first half,” said a Casetek official, who declined to be named.
Product development costs for clients’ new phones, notebook computers and tablet computers are likely to continue increasing in the first half, the official said, adding that growth prospects are subdued as the new products would only hit the market in the second half when the electronics sector enters its peak season.
“Shipments should return to normal situation in the second half,” the official said.
Gross margin last quarter tumbled to the lowest in six years to 11.1 percent from 21.6 percent a year earlier and 17.5 percent in the third quarter last year.
Costs of goods sold climbed 8.9 percent year-on-year or 17.5 percent quarter-on-quarter to NT$8.79 billion last quarter.
For the full year, Casetek saw its net profit tumble 40.9 percent to NT$1.66 billion from NT$2.8 billion in 2016. Earnings per share sank to NT$4.88 from NT$8.25.
Revenue inched up 1.5 percent to NT$33.25 billion last year from NT$32.76 billion a year ago.
Casetek generated between 55 percent and 60 percent of its revenue from supplying casings used in tablets, which are the biggest revenue source last year.
Casings for notebook computers came next with a 30 to 35 percent share, while those for smartphones had the smallest contribution, company data showed.
Casetek shares rose 1.87 percent to NT$98 yesterday in Taipei trading. The stock has lost 4.08 percent since the start of the year.
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