Tue, Apr 17, 2018 - Page 12 News List

Topco sees boon in product shortage

By Ted Chen  /  Staff reporter

Topco Technologies Corp (崇越電) yesterday said it expects to see a continued increase in profitability this year amid a global shortage in silicone products.

The silicone products supplier has seen its profits rise since the fourth quarter of 2016, as Beijing’s environmental crackdown and reforms aimed at reining in excessive production capacity took a toll on its Chinese rivals and led to shortages, Topco Technologies chief financial officer and spokesperson Wu Kun-ming (吳坤明) told an investors’ conference in Taipei.

Shortages are expected to continue this year as European suppliers have not expanded their production capacities in the past 15 years, while rapid economic growth on the continent has limited its export capacity, Wu said.

The company’s Chinese rivals mostly manufacture lower-end silicone products.

The shortage is expected to lead to a 2 percentage point increase in the firm’s margin in the first quarter of this year, Wu said, adding that it was still processing orders from last year that had been held up by a lack of raw materials.

While the company’s silicon products are used across a vast array of applications ranging from food containers, apparel, and construction and building materials, it expects to see growth in newer fields such as automotive, healthcare and cosmetic products, he said.

Silicone-based solutions have been devised to protect circuitry found in key automotive components such as engines, motors and batteries from heat and moisture, and the use of the material is expected to expand rapidly as electric vehicles gain wider adoption, Wu said.

Adoption of silicone-based solutions has made water resistance for smartphones — a feature that was rarely found two to three years ago — a standard for the most popular flagship devices, Wu said.

Demand for silicone has mainly been driven by automotive, cosmetics and medical equipment brands, which began using it instead of polyvinyl chloride plastics, but those new market segments only accounted for about 11 percent of the firm’s sales last year, Wu said.

The company’s net income last year rose 20.72 percent year-on-year to NT$350 million (US$11.89 million), with sales rising 6.21 percent from a year ago to NT$7.67 billion. Earnings per share were NT$5.65.

Gross margin and operating margin last year were 17.89 percent and 6.48 percent, up from 16.11 percent and 5.27 percent in 2016.

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