Contract electronics manufacturers Pegatron Corp (和碩), Compal Electronics Inc (仁寶) and Inventec Corp (英業達) gave a conservative outlook for last quarter’s earnings performances, saying that the sharp appreciation of the New Taiwan dollar would erode their profitability.
The announcements came after Pegatron, Compal, Inventec and Wistron Corp (緯創) booked a total foreign-exchange loss of NT$7.82 billion (US$257.8 million) for last year, mainly due to the NT dollar’s appreciation against the US dollar.
The yuan’s depreciation against the greenback also weighed on the companies’ non-operating performances last year, as they all have production lines in China.
The NT dollar has gained 5.92 percent against the US dollar to NT$30.336 so far this year, according to central bank data.
The scale of the appreciation is much larger than last year’s 2.44 percent, data showed, which added to the pressure on the earnings performances of export-oriented manufacturers this quarter.
Inventec said the stronger-than-expected NT dollar had an adverse effect on its earnings in the quarter from January to March.
“We expect our core businesses to remain stable in the first quarter of this year, but we are concerned that the currency exchange might erode Inventec’s profitability,” Inventec chief financial officer Yu Chin-pao (游進寶) told investors on Tuesday last week.
Inventec reported a net income of NT$5.63 billion for last year, but its accumulative currency-exchange losses totaled NT$1.92 billion over the same period, which amounted to more than one-third of its net profit.
Compal, which posted a foreign-exchange loss of NT$1.24 billion for last year, said the appreciation of the NT dollar played an important role in Compal’s non-operating items, as a majority of its revenue is denominated in US dollars.
“The sharp appreciation of NT dollar will affect Taiwan’s exports. It is time for the government to step in and do something about it,” Compal president Ray Chen (陳瑞聰) told reporters on Tuesday last week.
Pegatron posted the biggest foreign-exchange loss at NT$4.83 billion as the company is more vulnerable to a strong NT dollar and weak yuan than its local peers.
Pegatron chairman Tung Tzu-hsien (童子賢) last month told reporters that he foresees more currency fluctuations in the next three years, due to uncertain global political and economic dynamics.
“Looking ahead, volatile foreign-exchange changes are to add difficulties to manufacturers and brand vendors’ operations,” he said.
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