Yageo Corp (國巨), Taiwan's biggest maker of parts that control electricity flow in computers and handsets, said the NT$12.4 billion (US$399.6 million) in expenses the company recorded in the fourth quarter probably won't happen again.
Most of the costs were for the excess value the company paid for acquisitions, Remko Rosman, Yageo chief executive, said yesterday in an interview in Singapore. The write-off of what's known as goodwill was "a one-time shot," Rosman said.
"There will be a lean balance sheet going forward," Rosman said.
The Taipei-based company had a fourth-quarter net loss of NT$12.1 billion after posting a profit of NT$34 million a year earlier, Yageo said on Feb. 25. Sales, announced earlier, fell 25 percent to NT$2.2 billion.
A new accounting rule, Statements of Financial Accounting Standard 35, requires companies to restate the value of idle assets, including goodwill -- which is the price a company paid in excess of the market value for acquisitions.
The company's factory use will rise to more than 80 percent in the second quarter from about 71 percent in the current three-month period, Rosman said, reiterating the company's forecast last month.
In 2000 Yageo bought factories from Royal Philips Electronics NV, Europe's biggest maker of consumer electronics.
Yageo said it reduced its factory use in the fourth quarter in part to help cut inventory. Shipments in the current three-month period will increase by about 4 percent compared with the fourth quarter, as selling prices decline by the same percentage, the company said last month.
Yageo in March last year had its credit rating cut by Standard & Poor's affiliate Taiwan Rating Corp (中華信評) to non-investment grade. It has a rating of twBB+, one level lower than investment grade. That rating reflects the competitive and cyclical market conditions of the passive component sector in which Yageo operates.
The company controls about 28 percent of the global chip-resistor market and 10 percent of the worldwide multi-layered ceramic capacitor (MLCC) market, according to Taiwan Ratings.
Chip resistors and MLCCs accounted for about 30 percent and 47 percent, respectively, of Yageo's revenue in 2003. The company posted losses in 2003 and 2002 after a supply glut forced prices to fall.
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