Audio electronics maker Merry Electronics Co (美律) yesterday said that it expects business to slow this quarter due to the COVID-19 epidemic.
“We are looking at great challenges ahead … everything from our end to our clients’ end — we have a very low order visibility,” Merry president Allen Huang (黃朝豊) told investors at an earnings conference in Taipei.
Highlighting the recent outbreak of COVID-19 in Europe and the US, Huang said that clients are growing uneasy regarding market demand, which might dampen the firm’s upcoming orders.
Client demand is not Merry’s only concern.
An imminent shortage of materials might threaten production as the company’s Chinese suppliers struggle to resume operations, Huang said.
“We have had a shortage of button-cell batteries for our true wireless stereo earphones since last quarter, which has hurt our revenue,” Huang said.
Merry has sought help from a second supply source and expects the supplier’s shipments to arrive sometime next quarter after it addressed a quality control issue, the company said.
During the fourth quarter of last year, Merry’s revenue declined 35.76 percent year-on-year to NT$8.6 billion (US$285.49 million), which it mainly attributed to a 60 percent fall in sales of headsets due to a delay in production.
Merry’s largest contributing business segment, speakers, saw an 11 percent year-on-year increase in sales last quarter as demand for smartphone speakers exceeded the company’s expectations, Huang said.
The company’s net profit last quarter dropped 62.3 percent year-on-year to NT$466.85 million, resulting in earnings per share of NT$2.27.
Although Merry is resuming production at its Chinese plants relatively quickly after anti-epidemic measures were deployed, Huang said that revenue this quarter is expected to decline from last quarter.
“The production utilization rate at our plants varies between 60 and 90 percent … but it is no use for all our employees to return to work while we face material shortages,” Huang said, adding that he expects continued shortages of printed circuit boards, wires, cables and plastic packaging components in the near future.
“While we purchase electronic components globally, most of our suppliers are situated in China” where logistics are hindered, Huang said, providing a dim outlook for shipments this quarter.
The company is moving full steam ahead in setting up production in Vietnam for its newly announced venture with Chinese electronic component supplier Luxshare Precision Industry Co (立訊精密).
The Vietnam plant is to focus on the production of headsets with shipments expected in July.
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