Simplo posts income drop due to higher tax payments, currency appreciation

POWER UP::Rising demand for tablets is a threat to the company because the cost of battery packs for tablet computers is higher than that for notebooks, the firm said

By Helen Ku  /  Staff reporter

Sat, Mar 23, 2013 - Page 13

Simplo Technology Co (新普科技), which supplies battery packs for Apple Inc’s iPad tablets, yesterday posted a 31.43 percent quarter-on-quarter drop in net income for last quarter due to higher income tax payments and the appreciation of the New Taiwan dollar.

Net income last quarter fell to NT$650 million (US$21.76 million), the lowest level in the past two years, reflecting a 39.48 percent contraction on an annual basis.

The figure did not meet the company’s forecast for net income, which had been set at between NT$802 million and NT$826 million for the fourth quarter last year.

The reason for this was an increased tax rate that rose from an estimated 17 percent to 21 percent as the Chinese government, for unknown reasons, scrutinized more China-based Taiwanese firms last year, Simplo chairman and chief executive officer Raymond Sung (宋福祥) told an investors’ conference yesterday.

The only figure that met the company’s forecast was its NT$16.62 billion in sales.

Gross profit of NT$1.16 billion, operating expense of NT$603 million and operating profit of NT$561 million all missed the company’s forecast by 10.19 percent, 9.64 percent and 24.8 percent respectively, Simplo said.


This was attributable to disappointing financial results due to the more severe condition of the battery market last year amid an economic downturn and the appreciation of the New Taiwan dollar, Sung said.

He added that rising demand for tablets is a threat to the company because the cost of battery packs for tablet computers is higher than that for notebooks.

“We anticipate shipments of notebooks could increase at a mild growth rate this year, and we particularly expect to see demand for Ultrabook laptops grow so we can reap more profits from our battery packs used in these products, which we design with our exclusive technologies,” Sung told investors.

For this quarter, Simplo forecast sales would drop 30.81 percent quarter-on-quarter to NT$11.5 billion from NT$16.62 billion last quarter, with gross margin increasing to 11.47 percent from 10.8 percent.

Simplo is currently altering its corporate structure and expects to see manufacturing efficiency improve by 40 percent after replacing labor with automated equipment, which is the main factor supporting the company’s gross margin increase this quarter despite the decline in sales, Sung said.

For the whole year, Simplo forecast sales would expand at a double-digit growth rate from NT$58.83 billion last year.

The company forecast earnings per share (EPS) this quarter would grow 7.58 percent to NT$2.27 from NT$2.11 last quarter. Simplo’s EPS last year were NT$10.71, down 4.38 percent from NT$11.2 in the previous year.


Simplo is to launch new power bank products in the third quarter this year, predicting that the new product would be “very popular in the market” and drive up the company’s sales in the second half of the year to greatly exceed those in the first half, Sung said.

Last year, Simplo shipped 700 million high-power battery packs and power bank products to countries, including Taiwan, the US and European countries, Sung said.

The company has set a shipment target of 1 billion high-power batteries this year and 2 billion for next year, he added.