Sat, Jun 15, 2019 - Page 12 News List

Teco Electric eyes second-half revenue improvement

By Kwan Shin-han  /  Staff reporter

Leading industrial motor maker Teco Electric and Machinery Co (東元電機) yesterday said that it expects sales to improve in the second half on improved orders.

“Orders for our motors, and the mechanical and electrical construction business should pick up modestly,” Teco chairwoman Sophia Chiu (邱純枝) said after a shareholders’ meeting.

The company might have significant growth in China this year due to the growing demand for motors, Chiu said.

The North American market has reported growth, while Vietnam remained steady and the Taiwanese market remained flat, she said.

Motors contributed 47.5 percent to overall sales in the first quarter, home appliances accounted for 12.5 percent, system automation products contributed 10.5 percent, while mechanical and electrical construction products contributed 8 percent, the company said.

Telecommunications and other products and services made up the remaining 21.5 percent, it said.

Since last year, Teco has been adjusting its supply chain and output at its Chinese factories, which send half of their combined output to the Chinese market and the other half to overseas markets, it said.

“Between 60 and 70 percent of orders from foreign markets at our Chinese plant were transferred to Taiwan, Vietnam and Malaysia last year,” Chiu said.

After the adjustment, the company's plants in Qingdao, Shandong Province; Wuxi, Jiangsu Province; and in Jiangxi Province will mainly focus on making motors for the local market, it said.

Teco said that its plant in Taoyuan, which also makes motors, would supply the domestic and Japanese markets this year.

Its new motor factory in the Binh Duong Industrial Service and Residential Complex in Vietnam might start operations next month, it said.

The company plans to increase annual output at its Vietnamese plants from 200,000 small motors this year to 300,000 units next year, as more products would be shipped to the US to avoid tariffs, it said.

In India, the company said that it gained permission this year to sell motors locally after entering the country in 2007.

That might drive a single-digit percentage growth in Teco’s sales and profits this year, analysts said.

Revenue for the first five months dropped 5.86 percent to NT$19.7 billion (US$624.8 million), from NT$20.92 billion a year earlier, company data showed.

First-quarter net income climbed 18.11 percent to NT$634.58 million from a year earlier, it said.

Earnings per share improved from NT$0.27 to NT$0.32, while gross margin edged up 0.05 percentage points to 0.32 percent.

Shareholders approved a company plan to distribute a cash dividend of NT$0.9, suggesting a payout ratio of 56.6 percent based on earnings per share of NT$1.59 last year. It represents a dividend yield of 3.94 percent based on Teco’s closing price of NT$22.85 in Taipei trading yesterday.

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