Machinery maker Hiwin Technologies Co (上銀科技) yesterday reported falling sales and profits for the first quarter as US-China trade tension persists, but said it expects business to rebound next quarter due to growing momentum in markets outside China.
First-quarter net profit plunged 49 percent annually to NT$620 million (US$20.05 million) from NT$1.22 billion and fell 29 percent from the previous quarter’s NT$870 million, Hiwin said.
Earnings per share fell 2.15 percent annually to NT$2.06, the lowest in eight quarters, and were also down from NT$2.87 in the previous quarter.
Due to the trade dispute, lower utilization rates and a low-season effect, first-quarter revenue dropped 23 percent annually to NT$5.05 billion and 24 percent quarterly, while gross margin decreased 3.2 percentage points annually to 36.8 percent, but rose 0.9 percentage points quarterly to 36.8 percent.
“Gross margin has been low since the fourth quarter last year due to the trade dispute, which made our Chinese clients more conservative about orders and lowered our capacity utilization rate,” Hiwin associate vice president Leo Liao (廖克皇) said. “But the gross margin is expected to bounce back in the third quarter.”
Most precision machinery companies are still adjusting their business strategies to deal with the uncertainties of the US-China trade dispute, but the industry’s growth momentum should pick up later this year or at the beginning of next year, Hiwin chairman Eric Chuo (卓永財) said.
“We recently received an order for 10 industrial robots from our Vietnam clients,” Chuo said of the growing ASEAN market.
He added that Hiwin’s business in the second half of the year should outperform the first half.
Asia remained the largest revenue source for Hiwin in the first quarter, accounting for 51 percent of total revenue, compared with 59 percent a year earlier, company data showed.
As the Chinese market has contracted, Chuo expects India to drive growth, aided by the company’s plan to open machine tool factories in the South Asian nation in three years, he said.
Europe contributed 31 percent to revenue, up from last year’s 21 percent.
Chuo said the company’s Italian operations would move to a larger facility this year to incorporate more production lines.
Taiwanese operations contributed 11 percent to total sales last quarter, while the US made up 7 percent.
Hiwin said it would continue investing in Taiwan and has applied for a NT$6 billion loan to set up factories in Chiayi Dapumei Precision Machinery Park (嘉義大埔美精密機械園區) and Yunlin Technology-based Industrial Park (雲林科技工業園區), as well as expand its factory at Taichung Industrial Park (台中工業區).
Linear guideways remained the company’s most important product, contributing 70 percent, or NT$3.48 billion, to total revenue.
Ball screws came in second at 17 percent, or NT$876 million, while industrial robots made up 4 percent, or NT$222 million, company data showed.
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