Yeong Guan Energy Technology Group Co (永冠能源), one of the nation’s leading advanced casting component suppliers, yesterday said shipments in the third quarter of this year might be lower than expected, due to clients’ inventory digestion.
Headquartered in China’s Zhejiang Province, the firm ships products to China, Europe, the US and the rest of Asia.
“Shipments in the current quarter will total about 35,000 tonnes, lower than what we expected at the beginning of this year,” a company official said at an investors’ conference in Taipei yesterday.
The company attributed the decline to some of its clients, who are entering a period of inventory adjustment, especially clients in Germany.
Despite worse-than-expected shipments, the company said it would meet its annual shipping goal of 152,000 tonnes of products for the full year, remaining flat from last year.
Looking ahead, the firm is relatively optimistic about sales in the fourth quarter, as its clients are expected to start purchasing products for next year.
“The fourth quarter in Taiwan is the first quarter of next year for our German customers. Their new annual purchase plans are expected to help our sales rebound,” the official said, adding that a new plant in Shanghai is scheduled to begin trial production next month.
The Shanghai plant is expected to produce 5,000 tonnes of casting components by the end of this year, company data showed.
However, the firm expressed concern about a new factory in Taichung, which might not begin production as scheduled.
The company initially planned to build the factory in the electricity zone of the Port of Taichung to produce the company’s profit driver: offshore wind turbine casting components.
However, the firm last month said that it was forced to relocate the plant to an industrial area in Taichung after the land was reclaimed by the city government.
The official said the firm has still not acquired the Taichung City Government’s permission to begin construction.
“We will continue to negotiate with the local government,” the official said, without giving a clear schedule for the Taichung plant.
In the first seven months of this year, the firm’s sales dropped 6.7 percent to NT$4.48 billion (US$140.8 million) from the same period last year.
Yeong Guan shares yesterday fell NT$7 to close at NT$170.5, Taiwan Stock Exchange data showed.
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