Merry upbeat on outlook as customers boost orders ahead of holiday season

By Ted Chen  /  Staff reporter

Tue, Jul 31, 2018 - Page 12

Audio electronics maker Merry Electronics Co (美律) yesterday gave a positive business outlook for this quarter as its customers ramp up orders ahead of the Christmas season.

Entertainment device brands are boosting their inventories ahead of the holiday season and the company expects shipments to rise 50 percent from last quarter, Merry Electronics vice president Allen Huang (黃朝豐) told an investors’ conference.

The larger order volume would help the company maintain a higher capacity utilization rate, which would improve margins, Huang added.

The company last quarter benefited from a surge in demand for noise-canceling PC gaming headphones, which was driven by popular video games such as PlayerUnknown’s Battlegrounds.

Entertainment devices, including headphones, made up 74 percent of sales last quarter and would continue to be the primary growth driver for the company this quarter, Huang said.

Regarding speakers, which accounted for 23 percent of sales last quarter, Huang said the company expected to see improvements in profitability this quarter as it winds down shipments for a legacy smartphone model.

Looking ahead, the company expects the effects of a persisting shortage in multilayer ceramic capacitors (MLCCs) to subside, Huang said.

The company would carefully monitor its MLCC stocks, Huang said, adding that speakers do not require the component.

While the company has signed long-term contracts with MLCC suppliers, they cannot always fulfill customers’ orders, Huang said.

As a result, the company needs to buy MLCCs from the open market, often at exorbitant prices ranging between double and 10 times the normal price, he said.

The company last quarter reported net income of NT$73.91 million (US$2.41 million), recovering from a net loss of NT$71.12 million in the previous quarter. Earnings per share were NT$0.38.

However, net income in the second quarter fell 86.32 percent from NT$540.31 million a year earlier.

Second quarter sales rose 53.89 percent sequentially and 24.97 percent annually to NT$6.71 billion.

Gross margin last quarter came in at 9.67 percent, up 0.37 percentage points from a quarter earlier, with operating margin rising 3.75 percentage points sequentially to 2.67 percent, up from minus-1.08 percent in the previous quarter.