Thu, Sep 12, 2019 - Page 12 News List

Rechi moving back to Taiwan as trade spat hurts income

By Kwan Shin-han  /  Staff reporter

Air compressor maker Rechi Precision Co Ltd (瑞智精密) yesterday said that it started mass production at its new plant in Taoyuan’s Guanyin District (觀音) last month as it moves production lines back to Taiwan from China to avoid US tariffs.

The new plant with an annual capacity of 2 million compressors is expected to achieve an output of 1 million units later this year, most bound for the US, Rechi president Feng Ming-fa (馮明法) told an investors’ conference in Taipei.

The US market accounted for about 26 percent of Rechi’s sales in the first half of the year, while Europe contributed 27.2 percent, China made up 17.4 percent and Southeast Asia 10.2 percent, company data showed.

The company said it had negotiated with clients to jointly shoulder the new tariffs, but the negative effects still caused its net income to fall 34.87 percent year-on-year to NT$436.87 million (US$13.99 million) in the first six months.

Earnings per share dropped from NT$1.36 to NT$0.87 over the period, it said.

In response to the US-China trade dispute, the company has reduced its product prices by 10 percent since the second half of last year in a bid to boost shipments, but they still decreased 3.8 percent year-on-year from about 10.42 billion to 10.02 billion units in the first six months.

Feng attributed the decline to changes in demand, the lingering trade dispute and a slowdown in China’s real-estate market.

With the negative factors likely to remain for a while, the firm is not optimistic about compressor shipments next year, he said.

The company is pinning its hopes on frequency conversion air-conditioners and clothes dryers driving up demand for compressors, Feng said, forecasting that sales of compressors for air-conditioners would increase from 16 percent of total sales in the first six months to more than 40 percent in the next three years.

Rechi produced about 3 million compressors for clothes dryers last year, with Europe remaining its main market, he said.

Rechi’s cumulative revenue in the first eight months fell 9.66 percent year-on-year to NT$14 billion, data showed.

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