Fri, Aug 10, 2018 - Page 12 News List

Compal’s profit recovers as non-PC sales grow

STEADY SAILING:The firm appeared undaunted in the face of the US-Chinese trade war and said it is shielded from a components squeeze, citing long-term contracts

By Ted Chen  /  Staff reporter

Compal Electronics Inc spokesman Gary Lu, right, speaks at a news conference at the Taiwan Stock Exchange in Taipei on Tuesday.

Photo: Chuo Yi-chun, Taipei Times

Compal Electronics Inc (仁寶), which manufactures notebook computers on a contract basis, yesterday gave a positive outlook on shipments of non-PC products this quarter as the company continues to adjust its product mix.

Shipments of tablet computers, wearables, e-readers and other consumer electronics are expected to rise 30 to 40 percent this quarter from last quarter ahead of Christmas, besting the 10 percent sequential growth that the company recorded in the first quarter of the year, Compal president Martin Wong (翁宗斌) said at an investors conference in Taipei.

Non-PC and non-notebook products started shipping last month and this month, and volumes are to increase in November and December, Wong said, adding that notebook shipments could rise up to 5 percent sequentially this quarter.

By the end of this year, non-notebook and non-PC sales could make up 35 percent of the company’s total annual sales revenue this year, Wong said.

Regarding the ongoing shortage of passive components, Wong said that Compal is better prepared than some of its peers, as the company has established close ties with suppliers over the past few decades and has secured long-term contracts.

“Our contracts with suppliers were inked many years before the latest shortage,” Wong said.

However, the poor yield rate for Intel Corp’s latest 10-nanometer CPUs could be a concern and delay shipments of notebook computers further down the line, he said.

Regarding the escalating US-China trade war, Wong said that the projected effects are minimal and it is unlikely that the countries would announce a “third round” of tit-for-tat tariffs.

“If implemented, third-phase tariff hikes would cause tremendous damage and I trust that the parties involved will show restraint,” Wong said.

“Compal is not part of the iPhone supply chain,” Compal vice chairman Ray Chen (陳瑞聰) added, referring to possible US tariffs on the smartphones, which are assembled in China.

The company has not actively been working on contingency plans, Chen said, adding that while it is not difficult to reallocate production and assembly lines, shifting entire supply chains and industry hubs would pose a daunting challenge.

“Components and products in different stages of completion would still need to be shipped from major hubs in Taiwan, leading to an estimated 3 percent in additional costs,” Chen said, adding that the company has production bases in Taiwan, Mexico, Poland and Vietnam.

The company reported that net income last quarter rose 449 percent annually to NT$2.29 billion (US$74.77 million) as profits bounced back from a low comparison base in the same period last year that was caused by bad debt.

Net sales rose 11 percent annually to NT$237.88 billion and earnings per share were NT$0.48.

Gross margin was 3.3 percent, down from 3.7 percent, with operating margin improving to 1.1 percent, from 0.4 percent in the same quarter last year.

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