Fri, Nov 08, 2019 - Page 12 News List

Strong iPhone sales push Pegatron profit to NT$6bn

By Natasha Li  /  Staff reporter

Contract electronics manufacturer Pegatron Corp (和碩), which assembles Apple Inc’s iPhones, yesterday reported that net profit last quarter surged 122.5 percent to NT$6.29 billion (US$206.9 million), bolstered by strong iPhone sales and an improved product mix.

As a result, earnings per share reached NT$2.41, up from NT$1.08 a year earlier.

Third-quarter revenue increased by 10.2 percent year-on-year to NT$354.79 billion, while gross margin improved from 3.3 percent to 3.8 percent, thanks to a high and stable utilization rate as well as lower inventory costs, Pegatron chief financial offer Louise Wu (吳薌薌) said.

Despite the results, chief executive officer S.J. Liao (廖賜政) gave a conservative outlook for this quarter.

Shipments from the company’s network and communications segment are expected to decline by 10 to 15 percent on an annual basis due to a high comparison base, Liao said, adding that the segment’s revenue would nevertheless increase on a quarterly basis.

Revenue of the network and communications segment, which contributed 61 percent to the company’s overall revenue last quarter, grew by 12 percent year-on-year.

While the company’s consumer electronics segment, which contributed 14 percent to overall revenue, contracted by 9 percent year-on-year last quarter, Liao remained optimistic as he expects growth to come as the rollout of 5G accelerates.

“Next year will be a defining year for 5G technology products ... new smartphone models, devices that use the Internet of Things [IoT], wearables and gaming consoles,” Liao said, adding that she also has high hopes for smart home appliances.

Liao said he expects the company’s subsidiaries to also benefit next year from the deployment of 5G technologies, saying that the worst is over for silicon substrate maker Kinsus Interconnect Technology Corp (景碩), which posted net losses of NT$278.47 billion last quarter.

The company plans to relocate production lines from China to Vietnam and India, as well as moving an assembly plant to Batam, Indonesia, Liao said, adding that the Batam plant should start shipments in January.

Although reluctant to share details, Liao said that the moves to India and Vietnam are a response to customer demand, but the plan ultimately depends on how the trade spat between the US and China plays out.

Leaving China is unavoidable, as production costs there are bound to rise, Pegatron chairman Tung Tzu-hsien (童子賢) said earlier this year.

The company, which has pledged to invest NT$14.9 billion in Taiwan, is expanding its plants in Taoyuan’s Gueishan District (龜山) and purchasing a plant in New Taipei City’s Sindian District (新店), which would produce high-value-added products such as IoT sensors.

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