Wed, Jul 25, 2018 - Page 12 News List

Taiflex strategic shift to PCBs proving successful

By Ted Chen  /  Staff reporter

Taiflex Scientific Co (台虹科技) yesterday said that its efforts to scale down its loss-making solar panel business have been accelerated by a fire at one of its plants in China.

The company has been adjusting its product mix to focus on flexible printed circuit boards (PCB) and other eletronic materials as it shifts away from solar backsheets.

Demand for solar energy in China has tumbled since Beijing implemented a policy to cut subsidies for the renewable energy source at the end of May, while a fire in January had knocked out half of the solar production capacity at its plant in Kunshan, China, the company told an investors’ conference in Taipei.

Due to the disruption, Taiflex took the opportunity to repurpose parts of its capacity in Kunshan to make electronic materials, leading to an improved product mix throughout the first half of this year.

Sales contribution from photovoltaic (PV) backsheets fell from 20 percent of overall sales at the end of the first quarter to 15 percent at the end of last quarter, Taiflex said.

An improved product mix helped boost the company’s gross margin to 22.3 percent in the second quarter, gaining 2.5 percentage points from the first quarter.

In the second quarter, an improved product mix resulted in a gain of 2.5 percentage points in gross margin to 22.2 percent, while operating margin rose 1.2 percentage points to 10.2 percent.

Net income last quarter came to NT$158 million (US$5.14 million), up 62.7 percent sequentially, while sales rose 19.3 percent to NT$2.39 billion.

However, first-half net profit fell 13.2 percent annually to NT$255 million, while consolidated sales dipped 13.8 percent annually to NT$4.39 billion due to the loss of contribution from solar panels.

Sales of electronic materials in the first half rose 22.3 percent annually to NT$3.63 billion, while PV backsheets fell 63.3 percent annually to NT$776 million.

The company said that its business outlook should improve as the technology sector enters its peak season this quarter and as it continues to deepen ties with Japanese and Chinese PCB suppliers to meet growing demand from US Android smartphone brands.

The company said that its main product — flexible copper clad laminate — has seen growing demand and that it has been tapped to supply the material for smartphone camera lenses.

For this quarter, the company foresees a continued decline to PV backsheet sales, while sales of electronic materials could rise 27.1 percent sequentially to between NT$2.3 billion and NT$2.8 billion.

Gross margins and operating profits are forecast to rise to 23 percent and 12 percent respectively this quarter, the company said, noting that its guidance is calculated by the median of expected revenue.

This story has been updated since it was first published.

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