Elevator manufacturer Yungtay Engineering Co (永大機電) expects its revenue-losing Shanghai subsidiary to break even next year, as orders began to rebound last quarter.
Shanghai Yungtay Elevator Equipment Co (上海永大), which accounted for 56 percent of the group’s total revenue last year, reported losses of NT$30 million to NT$40 million (US$951,777 to US$1.27 million) for last quarter, with low utilization pushing the subsidiary’s gross margin down to 16 percent.
Shanghai Yungtay’s sales for this year are expected to bottom out, local Chinese-language media reported on Thursday, quoting Yungtay Engineering chairman Hsu Tso-ming (許作名).
While Shanghai Yungtay’s orders surged 90 percent year-on-year in the first four months of this year, it usually takes one to two years before confirmed orders contribute to sales figures, Hsu said, adding that the company expects last quarter’s orders to boost sales contributions in the second half of next year.
The chairman, who worked at the Shanghai unit for 20 years, said that the company’s goal for this year is to decrease losses at the unit and raise its gross margin to 19 to 21 percent.
In China, Yungtay Engineering expects orders to increase from 10,000 units last year to 20,000 units this year, as shipments grow from 7,700 to 13,000 units, local media reported.
In the local market, Yungtay Engineering expects flat order growth — about 3,000 units — with elevator maintenance and repairs being the main sales driver, they reported.
The maintenance and repair business accounted for more than 50 percent of Yungtay Engineering’s total revenue last year, the company said.
The company seeks to increase revenue from the maintenance of old elevators by 20 percent, after it contributed 15 percent of total revenue last year, it said.
Yungtay Engineering has a 27 percent share in the local elevator market and is working to expand its share in the high-end elevator market beyond 20 percent, the company said, adding that high-end elevator maintenance and repair have a high gross margin, which could boost the company’s net income, it said.
The company’s first-quarter net income plunged 62.16 percent to NT$136.37 million, from NT$360.42 million a year earlier.
Cumulative revenue for the first four months of this year fell 22.65 percent to NT$4.19 billion, compared with NT$5.42 billion over the same period last year.
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