Asustek Computer Inc (華碩) yesterday said sales and shipments for this quarter might grow 10 percent from last quarter on the back of recovering demand.
Fourth-quarter shipments of PC products are expected to reach 5.8 million units from 5.3 million units in the last quarter, chief financial officer Nick Wu (吳長榮) told an investors’ conference.
Shipments of mobile products are forecast to increase to 9 million units from 7.1 million units in the last quarter, while smartphones are likely to expand to 7 million units from 5.5 million units, he said.
Its bottom line should not be affected as much this quarter by foreign-exchange fluctuations, he added.
Asustek took a big hit from forex volatility in emerging market currencies, including Brazil’s real, in the third quarter.
The company post NT$2.29 billion (US$69.7 million) in forex losses last quarter, driving down non-operating profit to NT$109 million, less than one-tenth of the second quarter.
“We expect foreign-exchange related impacts to begin diminishing in the fourth quarter and beyond” following various hedging efforts, Wu said.
Total forex losses for the year might be between NT$1.5 billion and NT$2 billion, he said.
“When we launched new products in Brazil in August, the real had fallen from 3.4 against the US dollar to 4.2 in only 10 days. As a result, we were compelled to raise retail prices there, which inevitably hampered our sales,” chief executive officer Jerry Shen (沈振來) said.
He said the company would soon begin focusing more on its high-end product series, as premium products are more resilient against forex fluctuations.
Asustek’s third-quarter financials were better than its local peers due to tighter inventory control, but its net income of NT$4.22 billion was still down 27 percent from a year earlier. It posted revenue of NT$110.99 billion, with gross margin of 14.3 percent.
CIMB Securities Ltd analysts said Asustek's targets for next year to ship 22 million-24 million units of PCs and 36 million units of mobile devices -- including 30 million smartphones and 6 million tablets) -- looks "challenging."
Compared with this year's estimated shipments, the company's shipment targets for next year imply an annual growth of 47 percent for smartphones and a 5-10 percent increase for notebook computers, the brokerage said.
"These might be challenging targets amid the competitive business environment, but we believe Asustek should be able to outperform its peers as it has the right product strategy and can leverage on its strength and market share in ASEAN and India," CIMB analysts Felix Pan (潘俊宏) and James Tan said in a client note yesterday.
CIMB forecast Asustek's sales would grow 7 percent next year from this year and the company's net income might expand 11 percent annually, thanks to the company's operating leverage of growing smartphone business and the growth of its gaming notebook computers and Zenbook models.
However, despite a steady growth going forward, Asustek may face margin contraction in the longer term, in view of the low profit margin for smartphones and an intensified competition from rivals, Pan and Tan said.
This story has been updated since it was first published.
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