Inventec Corp (英業達), which assembles smartphones for Chinese firm Xiaomi Corp (小米), yesterday reported an annual decline of 21.57 percent in net income for last year, due to volatile foreign currency exchange rates.
Net profit last year plunged about 22 percent to NT$5.56 billion (US$170.94 million), or earnings per share of NT$1.55, from the previous year’s NT$7.09 billion, or NT$1.98 per share.
“Non-operating items were the hardest area for Inventec to control. Harsh depreciation of the yuan against the US dollar in August last year and the volatility of the New Taiwan dollar throughout the year affected the company’s earnings,” Inventec chief financial officer Yu Chin-pao (游進寶) told an investors’ conference in Taipei.
The contract electronics maker booked foreign exchange losses of NT$669 million last year, compared with a foreign exchange gain of NT$870 million a year earlier, Yu said.
Gross margin improved by 0.1 percentage points to 5.5 percent from a year earlier, while its operating margin dropped by 0.2 percentage points annually to 1.4 percent last year, according to the company.
Last quarter, Inventec’s net income plunged 80 percent annually and 80 percent quarterly to NT$499 million. Earnings per share were NT$0.28, compared with NT$0.53 per share over the same period a year earlier.
The quarterly earnings per share represented the lowest quarterly performance in the past 12 quarters, according to a company filing with the Taiwan Stock Exchange.
“The earnings result for last quarter was mainly dragged down by foreign-exchange losses of NT$487 million,” Yu said.
Yu said he is confident that Inventec’s core business, such as commercial PCs, handheld devices and servers would maintain stable growth this year from last year, adding that volatile currency exchanges would likely continue to affect Inventec.
“We will do our best to avoid risks, but it is still hard to control the currency changes,” he said.
Yu said he expects Inventec’s annual revenue to climb by a single-digit percentage this year from last year’s NT$395.47 billion.
David Ho (何代水), chief executive officer of Inventec’s handset subsidiary, Inventec Appliance Corp (英華達), said he is optimistic that the company would ship a total of 70 million handsets this year, up 40 percent from last year’s more than 50 million units.
“The outlook for this year is good. [Inventec Appliance] has more than 20 new clients, with many new businesses this year to counter the uncertainty of the global economy,” Ho said.
He said that, in addition to smartphone business, he expects wearable and acoustic segments to continue to grow this year in terms of shipments and revenue.
Also yesterday, Inventec announced a strategic partnership with Advantech Co Ltd (研華), the nation’s leading industrial computer maker, to jointly create a new company to produce manufacturing industrial wireless handheld devices.
The new company, AI Mobile Co (英研工業移動股份有限公司), is to have paid-in capital of NT$1 billion. Inventec is to own a 55 percent share of the firm and Advantech 45 percent, Yu said.
He said Inventec’s expertise is in material purchase and producing wireless handheld devices, while Advantech focuses on brand establishment and sales channels.
Yu said AI Mobile plans to recruit between 30 and 50 research and development experts before the end of this year.
The company is expected to become profitable by next year, he added.
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