Simplo forecasts steady margins in Q3

By Camaron Kao  /  Staff reporter

Tue, Aug 06, 2013 - Page 13

Laptop battery pack maker Simplo Technology Co (新普科技) yesterday said it expects its gross margin to remain steady at about 11 percent this quarter, compared with 11.2 percent last quarter.

The company’s remark came after local peer Dynapack International Technology Corp (順達科技) last week reported that its gross margin fell 2 percentage points last quarter to 5.3 percent because of increasing competition from China.

“We are unlikely to see a drastic decline in gross margin since we are better positioned in the market and less affected by the rising competition from Chinese battery suppliers,” Simplo chairman and chief executive officer Raymond Sung (宋福祥) told an investors’ conference.

“We have high expectations for our new products, and with good management, our gross margin should remain stable,” Sung said.

Simplo forecast that its revenue for this quarter would increase about 30 percent to between NT$14.8 billion and NT$15.2 billion (US$494.2 million and US$507.5 million) from NT$11.5 billion last quarter, as the company has begun supplying batteries for smartphones this quarter.

Sung said the company’s profit would also increase because of manufacturing automation and maintained his forecast that the company could earn NT$10 per share for the full year, despite declining notebook computer sales.

“Sales of global notebook computers may decline 3 percent this year from last year as they are increasingly replaced by tablet computers, while sales of smartphones will remain the same,” Sung said.

However, the decline in notebook sales is expected to ease next year as prices of Ultrabook computers drop, he said.

Simplo, which also supplies battery packs for Apple Inc’s iPad, forecast that net profit this quarter would reach between NT$862 million and NT$898 million, or earnings per share of between NT$2.80 and NT$2.91, higher than last quarter’s NT$650 million, or NT$2.11 per share.