Mobile phone chip designer MediaTek Inc (聯發科) yesterday reported 48.4 percent annual growth in net profit for the first quarter of the year, buoyed by a huge asset disposal gain as its operating profit dipped.
The company said its net profit soared to NT$6.64 billion (US$219.7 million) in the quarter ending March 31, compared with NT$4.47 billion in the same period last year.
Meanwhile, earnings per share jumped to NT$4.29 from NT$2.79 over the same period.
However, operating income tumbled 72.5 percent to NT$1.21 billion last quarter, compared with NT$4.4 billion in the same period last year, due to higher operational expenses, the company’s financial statement showed.
Non-operating income spiked to NT$6.29 billion last quarter, compared with NT$875 million a year earlier, underpinned by gains of NT$5.2 billion from selling a major stake in AutoChips Inc (傑發) to China’s largest digital map provider Navinfo Co Ltd (四維圖新), the company said.
Gross margin continued to decline to hit a new historical low of 33.5 percent last quarter, from 38.1 percent in the same period last year, weighed by stiff competition and sluggish smartphone demand primarily from China.
“Growth in smartphone demand has been decelerating in the first half after rapid growth last year,” firm vice chairman Hsieh Ching-jiang (謝清江) told investors.
The Hsinchu-based company has a long list of Chinese clients, including Oppo Mobile Telecommunications Corp (歐珀移動), Vivo Electronics Corp (維沃移動通信) and Xiomi Corp (小米), but Hsieh said Chinese smartphone vendors are facing an inventory adjustment period this quarter.
“Gross margin will continue to be under pressure in the second quarter because of rigorous competition,” Hsieh said, predicting the number would fall to between 32.5 percent and 35.5 percent.
“We expect a slight improvement in gross margin in the fourth quarter this year after new-generation, cost-efficient [smartphone] chips hit the market,” he said.
With investors fretting about the company’s margin outlook, MediaTek shares have underperformed the broader market by 6.45 percent so far this year, Taiwan Stock Exchange data showed.
The stock closed at NT$217 yesterday in Taipei trading, unchanged from the previous session.
The company’s revenue is forecast to be flat or grow 8 percent quarter-over-quarter to between NT$56.1 billion and NT$60.6 billion, Hsieh said.
“Smartphone demand recovers at a slow pace,” Hsieh said. “Most clients believe that demand will be much better in the third quarter, backed by normal inventory and seasonal demand.”
Shipments of chips used in smartphones and tablets are to increase by less than 5 percent quarterly to between 110 million and 120 million units this quarter, from last quarter’s range of 105 million to 115 million units, MediaTek said.
Separately, the company’s board yesterday approved distribution of a cash dividend of NT$9.5 per share based on its earnings of NT$15.16 per share last year and including a part from its capital surplus, representing a payout ratio of 62 percent.
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