Hiwin Technologies Co (上銀科技), a leading supplier of ball screws, linear guideways and industrial robots, yesterday forecast its core business would remain soft this quarter, but said it expects business to fare better next quarter, driven by increasing orders for industrial automation and robots.
“Shipments for Hiwin’s machine tools started to slow down last quarter due to overall weakness in the industry, and it is likely that the soft demand will persist throughout the remainder of this year and extend to the first half of next year,” Hiwin chairman Eric Chuo (卓永財) told reporters following an earnings conference in Taipei.
In the second quarter, Hiwin’s net income jumped 30.48 percent annually to NT$428 million (US$13.18 million), but plunged 16.89 percent from a quarter earlier, with earnings per share (EPS) of NT$1.6, missing the market’s consensus estimate of from NT$1.9 to NT$2.1.
Gross margin fell to a nine-quarter low of 35.9 percent last quarter, compared with the previous year’s 39.3 percent and prior quarter’s 39.2 percent, company data showed.
Chuo said China’s slowing economic growth and rising competition from Japan have suppressed global demand for Taiwan’s machine tool products, including Hiwin’s.
While industrial robots only accounted for 7 percent of the company’s total revenue of NT$4.32 billion last quarter, Chuo said this segment is to be Hiwin’s main growth driver this year.
“The machine tool segment is soft, but the demand for industrial automation and robots is getting stronger. I expect the robust demand for industrial robots to offset the weak demand for machine tool in the fourth quarter,” Chuo said.
He said the demand for single-axis robots used in the production process of smartphones was relatively soft in the first half of the year, mainly due to international smartphone brands’ requesting their handset assemblers to use older models of single-axis robots to cut costs.
However, demand for Hiwin’s multiple-axis robots used in various industries, such as pharmaceuticals and food processing, increased strongly in the past few months, he said.
“Some applications for industrial robots surprised me. I’ve never thought about using industrial robots to cut chicken fillets. The demand in the food industry is particularly strong,” Chuo said.
In an effort to expand production capacity for industrial robots, Chuo said the company is renovating its existing research and development center to a manufacturing plant.
On the back of the promising business of industrial automation, Chuo said he expects Hiwin’s annual revenue to hit a record level this year, growing at least 5 percent from last year’s NT$15.08 billion.
In the first seven months this year, cumulative revenue totaled NT$9.28 billion, up 17.5 percent from the same period last year.
However, Daiwa Capital Markets Inc is concerned about industrial automation demand in the second half amid the sluggish demand in China.
“We are concerned that Hiwin’s industrial robotics business will not be able to offset the weakness in industrial automation, as the robotics business is likely to account for less than 10 percent of its total sales in the second half of 2015,” Daiwa said in a note yesterday, cutting its 12-month share price target on Hiwin to NT$152 from NT$204.
Hiwin shares dropped 3.14 percent to NT$169.5 in Taipei trading yesterday.
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